Vickrey Prices and Shortest Paths: What is an Edge Worth?
FOCS '01 Proceedings of the 42nd IEEE symposium on Foundations of Computer Science
SODA '04 Proceedings of the fifteenth annual ACM-SIAM symposium on Discrete algorithms
Algorithmic Game Theory
Optimal mechanism design and money burning
STOC '08 Proceedings of the fortieth annual ACM symposium on Theory of computing
Efficiency of (revenue-)optimal mechanisms
Proceedings of the 10th ACM conference on Electronic commerce
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In this paper we study a large class of resource allocation problems with an important complication, the utilization cost of a given resource is private information of a profit maximizing agent. After reviewing the characterization of the optimal bayesian mechanism, we study the informational cost introduced by the presence of private information. Our main result is to provide an upper bound for the ratio between the cost under asymmetric information and the cost of a fully informed designer, which is independent of the combinatorial nature of the problem and only depend on the statistical distribution of the resource costs. In particular our bounds evaluates to 2 when the utilization cost's distributions are symmetric and unimodal and this is tight. We also show that this bound holds for a variation of the Vickrey-Clark-Groves mechanism, which always achieves an ex-post efficient allocation. Finally we point out implementation issues of the considered mechanisms.