Optimal Auction Design with Deferred Inspection and Reward

Abstract

In a variety of auction contexts, particularly those facilitated by digital marketplaces, auctioneers are now empowered to review the valuations submitted by purchasers and modify the final payments accordingly. Alaei et al. formulate and study the optimal design of such auctions, demonstrating that both the analysis and implementation vastly depart from classical settings. In particular, the analysis requires tools from convex analysis and the calculus of variations, which could be of independent interest in other mechanism design questions.