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Non-Clairvoyant Dynamic Mechanism Design

71 Pages Posted: 23 Nov 2016 Last revised: 15 Jul 2017

Vahab Mirrokni

Google Inc.

Renato Paes Leme

Google Inc.

Pingzhong Tang

Tsinghua University

Song Zuo

Tsinghua University - Institute for Interdisciplinary Information Sciences, Students

Date Written: July 7, 2017

Abstract

Despite their better revenue and welfare guarantees for repeated auctions, dynamic mechanisms have not been widely adopted in practice. This is partly due to the complexity of their implementation as well as their unrealistic use of forecasting for future periods. We address these shortcomings and present a new family of dynamic mechanisms that are simple to compute and require no distribution knowledge of future periods.

This paper introduces the concept of non-clairvoyance in dynamic mechanism design, which is a measure-theoretic restriction on the information that the seller is allowed to use. A dynamic mechanism is non-clairvoyant if the allocation and pricing rule at each period does not depend on the type distributions in future periods.

We develop a framework for characterizing, designing, and proving lower bounds for dynamic mechanisms (clairvoyant or non-clairvoyant). This framework is used to characterize the revenue extraction power of non-clairvoyant mechanisms with respect to mechanisms that are allowed unrestricted use of distributional knowledge.

Keywords: Dynamic Mechanism Design, Bank Account Mechanisms, Non-Clairvoyance, Dynamic Auctions, Approximations, Internet Advertising

JEL Classification: D44, C73, D82

Suggested Citation

Mirrokni, Vahab and Paes Leme, Renato and Tang, Pingzhong and Zuo, Song, Non-Clairvoyant Dynamic Mechanism Design (July 7, 2017). Available at SSRN: https://ssrn.com/abstract=2873701 or http://dx.doi.org/10.2139/ssrn.2873701

Vahab Mirrokni

Google Inc. ( email )

1600 Amphitheatre Parkway
Second Floor
Mountain View, CA 94043
United States

Renato Paes Leme

Google Inc. ( email )

1600 Amphitheatre Parkway
Second Floor
Mountain View, CA 94043
United States

Pingzhong Tang

Tsinghua University ( email )

Beijing, 100084
China

Song Zuo (Contact Author)

Tsinghua University - Institute for Interdisciplinary Information Sciences, Students ( email )

Beijing
China

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