Publications
Publications
  • November 2023
  • Article
  • Econometrica

Algorithmic Mechanism Design with Investment

By: Mohammad Akbarpour, Scott Duke Kominers, Kevin Michael Li, Shengwu Li and Paul Milgrom
  • Format:Electronic
  • | Pages:35
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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

Mechanism Design; Market Design; Auctions

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.

About The Author

Scott Duke Kominers

Entrepreneurial Management
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