Publications
Publications
- November 2023
- Econometrica
Algorithmic Mechanism Design with Investment
By: Mohammad Akbarpour, Scott Duke Kominers, Kevin Michael Li, Shengwu Li and Paul Milgrom
Abstract
We study the investment incentives created by truthful mechanisms that allocate resources using approximation algorithms. Some approximation algorithms guarantee nearly 100% of the optimal welfare, but have only a zero guarantee when one bidder can invest before participating. An algorithm's worst-case allocative and investment guarantees coincide if and only if that algorithm's "confirming negative externalities" are sufficiently small. We introduce new fast approximation algorithms for the knapsack problem that have no confirming negative externalities, with guarantees close to 100% both with and without investments.
Keywords
Citation
Akbarpour, Mohammad, Scott Duke Kominers, Kevin Michael Li, Shengwu Li, and Paul Milgrom. "Algorithmic Mechanism Design with Investment." Econometrica 91, no. 6 (November 2023): 1969–2003.