Mechanism Design via Machine Learning

  • Authors:
  • Maria-Florina Balcan;Avrim Blum

  • Affiliations:
  • Carnegie Mellon University;Carnegie Mellon University

  • Venue:
  • FOCS '05 Proceedings of the 46th Annual IEEE Symposium on Foundations of Computer Science
  • Year:
  • 2005

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Abstract

We use techniques from sample-complexity in machine learning to reduce problems of incentive-compatible mechanism design to standard algorithmic questions, for a wide variety of revenue-maximizing pricing problems. Our reductions imply that for these problems, given an optimal (or \beta-approximation) algorithm for the standard algorithmic problem, we can convert it into a (1+ \in)-approximation (or \beta(1+ \in)-approximation) for the incentive-compatiblemechanism design problem, so long as the number of bidders is sufficiently large as a function of an appropriate measure of complexity of the comparison class of solutions. We apply these results to the problem of auctioning a digital good, the attribute auction problem, and to the problem of itempricing in unlimited-supply combinatorial auctions. From a learning perspective, these settings present several challenges: in particular, the loss function is discontinuous and asymmetric, and the range of bidders驴 valuations may be large.