Simple and Effective: A Deterministic Auction with Support Information

This is the authors' abstract. We don't add key points for this paper.

We study an auction design problem where a seller aims to sell a single item to multiple bidders with independent private values. The seller knows only an upper bound on these values and does not know their distribution. The objective is to devise a deterministic auction mechanism effective across a broad set of distributions. We propose a second price auction with a reserve price set at half of the upper bound. Even though no deterministic mechanism can achieve a positive fraction of the maximum achievable expected revenue across all distributions, we show that our mechanism achieves at least [Formula: see text] ([Formula: see text] under independent and identically distributed (i.i.d.) values) of the maximum expected revenue for a broad range of distributions of practical importance, where [Formula: see text] depends on the number of bidders and takes values in [Formula: see text]. Numerical experiments under randomly generated distributions demonstrate the superior performance of our mechanism in the vast majority of the generated instances compared to benchmark mechanisms from the literature. We also account for errors in the upper bound estimate. History: This paper has been accepted for the Mathematics of Operations Research Special Issue on Market Design.