Practical versus Optimal Mechanisms

Designing simple mechanisms with desirable revenue guarantees has become a major research agenda in the economics and computation community. However, few mechanisms have been actually applied in industry. In this paper, we aim to bridge the gap between the “simple versus optimal” theory and practice, and propose a class of parameterized mechanisms, tailored for the sponsored search auction settings. Our mechanisms can balance different objectives by simple parameter tuning, yet at the same time guarantee near optimal revenue in both theoretical and practical senses.

Authors

• Weiran Shen Gaoling School of Artificial Intelligence, Renmin University of China
• Pingzhong Tang Institute for Interdisciplinary Information Sciences, Tsinghua University

Keywords

• auction
• revenue maximization
• sponsored search
• applied mechanism design