The FedEx Problem
Consider the pricing problem faced by FedEx. Each customer has a package to ship, a deadline $d$ by which he needs his package to arrive, and a value $v$ for a guarantee that the package will arrive by his deadline. FedEx can (and does) offer a number of different shipping options in order to extract more revenue from their customers. In this paper, we solve the optimal (revenue maximizing) auction problem for the single agent version of this problem. Our paper adds to the relatively short list of multi parameter settings for which a closed form solution is known.
EC