On approximating optimal auctions
Proceedings of the 3rd ACM conference on Electronic Commerce
On the Hardness of Optimal Auctions
FOCS '02 Proceedings of the 43rd Symposium on Foundations of Computer Science
Auctions with severely bounded communication
Journal of Artificial Intelligence Research
Multi-keyword sponsored search
Proceedings of the 12th ACM conference on Electronic commerce
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A well-known result due to Vickery gives a mechanism for selling a number of goods to interested buyers in a way that achieves the maximum social welfare. In practice, a problem with this mechanism is that it requires the buyers to specify a large number of values. In this paper we study the problem of designing optimal mechanisms subject to constraints on the complexity of the bidding language in a setting where buyers have additive valuations for a large set of goods. This setting is motivated by sponsored search auctions, where the valuations of the advertisers are more or less additive, and the number of keywords that are up for sale is huge. We give a complete solution for this problem when the valuations of the buyers are drawn from simple classes of prior distributions. For a more realistic class of priors, we show that a mechanism akin to the broad match mechanism currently in use provides a reasonable bicriteria approximation.