Optimal price decremental strategy for Dutch auctions

Wing Ho Yuen, Chi Wan Sung, Wing Shing Wong
2002 Communications in Information and Systems  
In a Dutch auction, the price of an item decreases incrementally from the starting price at regular intervals. A bidder may buy the item at any time and stop the auction at the current price. This paper presents an optimal price decrement strategy in a Dutch auction, such that the expected revenue of the auction host is maximized. Properties of the optimal solution and a simple iterative solution methodology are discussed. Numerical studies show that significant gain could be obtained compared
more » ... obtained compared with a simple reference strategy.
doi:10.4310/cis.2002.v2.n4.a6 fatcat:hwa6ljhpvrdaloltkb4hfhaiwu