Incentive Compatibility and Semi-Dynamic Auction

Ning Chen

We introduce and study a new auction model in which a certain type of
goods is offered over a period of time, and buyers arrive at different
times and stay until a common deadline (unless their pur-chase
requests have been fulfilled). We examine in this model incentive
compatible auction protocols (i:e:, those that induce participants to
bid their true valuations).

We establish an interesting connection between incentive compatibility
and price sequence: incentive compatibility forces a non-decreasing
price sequence under some assumptions on market pricing schemes. Our
protocol may not ensure that one item must be sold everyday.  Imposing
such a market intervention, we show an impossibility result that
deterministic incentive compatible auction protocols do not
exist. With randomized relaxation, we give such an incentive
compatible auction protocol.