Efficient Dynamic Auctions
We consider the truthful implementation of the socially eﬀicient allocation in a dynamic private value environment in which agents receive private information over time. We show that a suitable generalization of the Vickrey-Clark-Groves mechanism, based on the marginal contribution of each agent, leads to truthtelling in every period. A leading example of a dynamic allocation model is the sequential auction of a single good in which the current winner of the object receives additional information about her valuation. We show that a modiﬁed sequential second price auction in which only the current winner makes a positive payment leads to truthtelling. In general allocation problems, the marginal contribution mechanism continues to induce truthtelling in every period but may now include positive transfers for many agents.
Bergemann, Dirk and Välimäki, Juuso, "Efficient Dynamic Auctions" (2006). Cowles Foundation Discussion Papers. 1876.