Multi-parameter mechanisms with implicit payment computation

Moshe Babaioff, Robert Kleinberg, Aleksandrs Slivkins

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

15 Scopus citations

Abstract

In this paper we show that payment computation essentially does not present any obstacle in designing truthful mechanisms, even for multi-parameter domains, and even when we can only call the allocation rule once. We present a general reduction that takes any allocation rule which satisfies \cyclic monotonicity" (a known necessary and suffcient condition for truthfulness) and converts it to a truthful mechanism using a single call to the allocation rule, with arbitrarily small loss to the expected social welfare. A prominent example for a multi-parameter setting in which an allocation rule can only be called once arises in sponsored search auctions. These are multi-parameter domains when each advertiser has multiple possible ads he may display, each with a different value per click. Moreover, the mechanism typically does not have complete knowledge of the click-realization or the click-through rates (CTRs); it can only call the allocation rule a single time and observe the click information for ads that were presented. On the negative side, we show that an allocation that is truthful for any realization essentially cannot depend on the bids, and hence cannot do better than random selection for one agent. We then consider a relaxed requirement of truthfulness, only in expectation over the CTRs. Even for that relaxed version, making any progress is challenging as standard techniques for construction of truthful mechanisms (as using VCG or an MIDR allocation rule) cannot be used in this setting. We design an allocation rule with non-trivial performance and directly prove it is cyclic-monotone, and thus it can be used to create a truthful mechanism using our general reduction.

Original languageEnglish
Title of host publicationEC 2013 - Proceedings of the 14th ACM Conference on Electronic Commerce
PublisherAssociation for Computing Machinery
Pages35-52
Number of pages18
ISBN (Print)9781450319621
DOIs
StatePublished - 2013
Externally publishedYes
Event14th ACM Conference on Electronic Commerce, EC 2013 - Philadelphia, PA, United States
Duration: 16 Jun 201320 Jun 2013

Publication series

NameProceedings of the ACM Conference on Electronic Commerce

Conference

Conference14th ACM Conference on Electronic Commerce, EC 2013
Country/TerritoryUnited States
CityPhiladelphia, PA
Period16/06/1320/06/13

Keywords

  • Algorithmic mechanism design
  • Multi- armed bandits
  • Multi-parameter mechanisms

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