Truthful randomized mechanisms for combinatorial auctions

ABSTRACT

We design two computationally-efficient incentive-compatible mechanisms for combinatorial auctions with general bidder preferences. Both mechanisms are randomized, and are incentive-compatible in the universal sense. This is in contrast to recent previous work that only addresses the weaker notion of incentive compatibility in expectation. The first mechanism obtains an O(√m)-approximation of the optimal social welfare for arbitrary bidder valuations -- this is the best approximation possible in polynomial time. The second one obtains an O(log² m)-approximation for a subclass of bidder valuations that includes all submodular bidders. This improves over the best previously obtained incentive-compatible mechanism for this class which only provides an O(√ m)-approximation.

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INDEX TERMS

Primary Classification:
  F. Theory of Computation
  F.2 ANALYSIS OF ALGORITHMS AND PROBLEM COMPLEXITY
      F.2.2 Nonnumerical Algorithms and Problems

General Terms:
Algorithms

Keywords:
combinatorial auctions, incentive compatibility