The Dynamic Pivot Mechanism
We consider truthful implementation of the socially eﬀicient allocation in an independent private-value environment in which agents receive private information over time. We propose a suitable generalization of the pivot mechanism, based on the marginal contribution of each agent. In the dynamic pivot mechanism, the ex-post incentive and ex-post participation constraints are satisﬁed for all agents after all histories. In an environment with diverse preferences it is the unique mechanism satisfying ex-post incentive, ex-post participation and eﬀicient exit conditions. We develop the dynamic pivot mechanism in detail for a repeated auction of a single object in which each bidder learns over time her true valuation of the object. We show that the dynamic pivot mechanism is equivalent to a modiﬁed second price auction.
Bergemann, Dirk and Välimäki, Juuso, "The Dynamic Pivot Mechanism" (2008). Cowles Foundation Discussion Papers. 1981.