Mechanism Design via Machine Learning

We use techniques from sample-complexity in machine learning to reduce problems of incentive-compatible mechanism design to standard algorithmic questions, for a wide variety of revenue-maximizing pricing problems. Our reductions imply that for these problems, given an optimal (or β-approximation) algorithm for the standard algorithmic problem, we can convert it into a (1 + )-approximation (or β(1+ )-approximation) for the incentive-compatible mechanism design problem, so long as the number of bidders is sufficiently large as a function of an appropriate measure of complexity of the comparison class of solutions. We apply these results to the problem of auctioning a digital good, the attribute auction problem, and to the problem of itempricing in unlimited-supply combinatorial auctions. From a learning perspective, these settings present several challenges: in particular, the loss function is discontinuous and asymmetric, and the range of bidders’ valuations may be large.

• Type: Conference
• Year: 2005
• Where: FOCS
• Authors: Maria-Florina Balcan, Avrim Blum, Jason D. Hartline, Yishay Mansour
• Keywords: FOCS 2005, Incentive-compatible Mechanism Design, Standard Algorithmic Problem, Standard Algorithmic Questions, Theoretical Computer Science