
doi: 10.65109/imlu4737
We consider the problem of how a buyer can optimize his utility if he can choose his own valuation distribution in a prior-dependent auction, such as the revenue-optimal auction. The problem is motivated by and equivalent to a type of the market segmentation problem, where a principal tries to select a subset of agents (i.e., a market segment) from the set of all agents, each with a constant valuation, to attend a posted price auction for selling multiple identical items, in order to maximize the total utilities of the agents selected into the market segment. Our results are closed-form solutions in both the single buyer case as well as the multi-buyer case where several buyers best response to each other. Interestingly, in the two-buyer case, essentially all commitments that satisfy a certain condition are equilibria.
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