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A simple and approximately optimal mechanism for an additive buyer

A simple and approximately optimal mechanism for an additive buyer A Simple and Approximately Optimal Mechanism for an Additive Buyer MOSHE BABAIOFF Microsoft Research and NICOLE IMMORLICA Microsoft Research and BRENDAN LUCIER Microsoft Research and S. MATTHEW WEINBERG Princeton University In this letter we briefly survey our main result from [Babaioff el al. 2014]: a simple and approximately revenue-optimal mechanism for a monopolist who wants to sell a variety of items to a single buyer with an additive valuation. Categories and Subject Descriptors: J.4 [Social and Behavioral Science]: Economics General Terms: Economics, Theory Additional Key Words and Phrases: Optimal Mechanisms, Simple Mechanisms, Revenue, Approximation 1. INTRODUCTION Imagine that a monopolist seller has a collection of n indivisible items for sale. How should he sell the items to maximize revenue given that the buyers are strategic? With just a single item for sale to a single buyer with value drawn from a distribution F , Myerson [1981] shows that the optimal protocol is straightforward: the seller should post a fixed take-it-or-leave-it price p chosen to maximize p · (1 - F (p)), the expected revenue (price times probability of sale). Despite the simplicity of the single-item case, extending this solution to handle multiple items remains the primary open challenge http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png ACM SIGecom Exchanges Association for Computing Machinery

A simple and approximately optimal mechanism for an additive buyer

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Publisher
Association for Computing Machinery
Copyright
Copyright © 2015 by ACM Inc.
ISSN
1551-9031
DOI
10.1145/2728732.2728736
Publisher site
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Abstract

A Simple and Approximately Optimal Mechanism for an Additive Buyer MOSHE BABAIOFF Microsoft Research and NICOLE IMMORLICA Microsoft Research and BRENDAN LUCIER Microsoft Research and S. MATTHEW WEINBERG Princeton University In this letter we briefly survey our main result from [Babaioff el al. 2014]: a simple and approximately revenue-optimal mechanism for a monopolist who wants to sell a variety of items to a single buyer with an additive valuation. Categories and Subject Descriptors: J.4 [Social and Behavioral Science]: Economics General Terms: Economics, Theory Additional Key Words and Phrases: Optimal Mechanisms, Simple Mechanisms, Revenue, Approximation 1. INTRODUCTION Imagine that a monopolist seller has a collection of n indivisible items for sale. How should he sell the items to maximize revenue given that the buyers are strategic? With just a single item for sale to a single buyer with value drawn from a distribution F , Myerson [1981] shows that the optimal protocol is straightforward: the seller should post a fixed take-it-or-leave-it price p chosen to maximize p · (1 - F (p)), the expected revenue (price times probability of sale). Despite the simplicity of the single-item case, extending this solution to handle multiple items remains the primary open challenge

Journal

ACM SIGecom ExchangesAssociation for Computing Machinery

Published: Jan 28, 2015

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