Dynamic Mechanism Design
Online auctions, electronic catalogues...How should one sell goods on the Internet in order to maximize revenue? The answer provided by most of the research to date on Mechanism Design in relatively unsatisfactory because it ignores the timing of transactions and buyer arrivals, a key aspect of typical electronic commerce environments. Extending previous work in Auction and Search Theory, I propose a formulation for the problem of maximizing expected time-discounted revenues when selling multiple identical items to a stream of time-sensitive, self-interested potential customers. I then derive the optimal dynamic mechanism in this framework, and conduct numerical simulations to compare its performance with that of other commonly used dynamic mechanisms such as online catalogues and auctions.