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The complexity of simplicity in mechanism design

The complexity of simplicity in mechanism design The Complexity of Simplicity in Mechanism Design AVIAD RUBINSTEIN UC Berkeley Optimal mechanisms are often prohibitively complicated, leading to serious obstacles both in theory and in bridging theory and practice. Consider the problem of a monopolist seller facing a single additive buyer with independent valuations over n heterogeneous items. Even in this simple setting, it is known that optimal (revenue-maximizing) mechanisms may require randomization [Hart and Reny 2012], use menus of infinite size [Daskalakis et al. 2015], and may be computationally intractable [Daskalakis et al. 2014]. In a letter here last year, Babiaoff et al. [Babaioff et al. 2014a] described their attempt to alleviate the problem by showing that a constant fraction of the optimal revenue can be obtained by a simple mechanism. In this letter we argue in favor of a related research direction: finding the optimal simple mechanism. We survey our recent results in this setting [Rubinstein 2016] and draw attention to the question of what is a "simple" mechanism? Categories and Subject Descriptors: J.4 [Social and Behavioral Science]: Economics General Terms: Algorithms; Economics, Theory Additional Key Words and Phrases: Optimal Mechanisms, Simple Mechanisms, Revenue, Approximation 1. INTRODUCTION Mechanism Design 101. Perhaps the most central problem http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png ACM SIGecom Exchanges Association for Computing Machinery

The complexity of simplicity in mechanism design

ACM SIGecom Exchanges , Volume 14 (2) – Mar 16, 2016

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Publisher
Association for Computing Machinery
Copyright
Copyright © 2016 by ACM Inc.
ISSN
1551-9031
DOI
10.1145/2904104.2904110
Publisher site
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Abstract

The Complexity of Simplicity in Mechanism Design AVIAD RUBINSTEIN UC Berkeley Optimal mechanisms are often prohibitively complicated, leading to serious obstacles both in theory and in bridging theory and practice. Consider the problem of a monopolist seller facing a single additive buyer with independent valuations over n heterogeneous items. Even in this simple setting, it is known that optimal (revenue-maximizing) mechanisms may require randomization [Hart and Reny 2012], use menus of infinite size [Daskalakis et al. 2015], and may be computationally intractable [Daskalakis et al. 2014]. In a letter here last year, Babiaoff et al. [Babaioff et al. 2014a] described their attempt to alleviate the problem by showing that a constant fraction of the optimal revenue can be obtained by a simple mechanism. In this letter we argue in favor of a related research direction: finding the optimal simple mechanism. We survey our recent results in this setting [Rubinstein 2016] and draw attention to the question of what is a "simple" mechanism? Categories and Subject Descriptors: J.4 [Social and Behavioral Science]: Economics General Terms: Algorithms; Economics, Theory Additional Key Words and Phrases: Optimal Mechanisms, Simple Mechanisms, Revenue, Approximation 1. INTRODUCTION Mechanism Design 101. Perhaps the most central problem

Journal

ACM SIGecom ExchangesAssociation for Computing Machinery

Published: Mar 16, 2016

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