New Draw Auction Maximizes Seller Profit for Bimodal Valued Objects.
A new auction method called the Draw auction is introduced for selling objects with bimodal density functions. In this auction, if the minimum price is not met, a draw is implemented. The Draw auction reaches a Bayesian Nash equilibrium when players bid their true valuations, resulting in higher seller profits compared to second-price auctions. For objects with bimodal valuations, the Draw auction outperforms second-price auctions. Additionally, the expected profit for the seller in the Draw auction is nearly as good as in the optimal Myerson auction, but simpler to implement. Computational tests support these findings, showing the effectiveness of the Draw auction for selling objects with bimodal valuations.