Multi-parameter mechanism design and sequential posted pricing

We study the classic mathematical economics problem of Bayesian optimal mechanism design where a principal aims to optimize expected revenue when allocating resources to self-interested agents with preferences drawn from a known distribution. In single parameter settings (i.e., where each agent’s preference is given by a single private value for being served and zero for not being served) this problem is solved [20]. Unfortunately, these single parameter optimal mechanisms are impractical and rarely employed [1], and furthermore the underlying economic theory fails to generalize to the important, relevant, and unsolved multi-dimensional setting (i.e., where each agent’s preference is given by multiple values for each of the multiple services available) [25]. In contrast to the theory of optimal mechanisms we develop a theory of sequential posted price mechanisms, where agents in sequence are offered take-it-or-leave-it prices. We prove that these mechanisms are approximately optim...

• Type: Conference
• Year: 2010
• Where: STOC
• Authors: Shuchi Chawla, Jason Hartline, David Malec and Balasubramanian Sivan
• Keywords: Bayesian Optimal Mechanism, Optimal Mechanisms, Parameter Optimal Mechanisms, STOC 2010