Mechanism Design with Approximate Valuations

Authors: Alessandro Chiesa, Silvio Micali, and Zeyuan Allen Zhu.

Bibliographic information: Proceedings of the 3rd Symposium on Innovations in Theoretical Computer Science. (BibTeX)


We study single-good auctions in a setting where each player knows his own valuation only within a constant multiplicative factor \delta in (0,1), and the mechanism designer knows \delta. The classical notions of implementation in dominant strategies and implementation in undominated strategies are naturally extended to this setting, but their power is vastly different.

On the negative side, we prove that no dominant-strategy mechanism can guarantee social welfare that is significantly better than that achievable by assigning the good to a random player.

On the positive side, we provide tight upper and lower bounds for the fraction of the maximum social welfare achievable in undominated strategies, whether deterministically or probabilistically.

The ITCS 2012 version is only an introductory non-archival draft. The full version of the paper, with the title Knightian Auctions, is on [arXiv].

Alessandro Chiesa
Last modified: Wed, 07 May 2014 20:28:41 -0400
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