Non-Clairvoyant Dynamic Mechanism Design

61 Pages Posted: 23 Nov 2016 Last revised: 2 Nov 2018

See all articles by Vahab Mirrokni

Vahab Mirrokni

Google Inc.

Renato Paes Leme

Google Inc.

Pingzhong Tang

Tsinghua University

Song Zuo

Google Inc., New York

Date Written: October 13, 2018

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 and require no distributional 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 the future periods.

We develop a framework (bank account mechanisms) 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 the non-clairvoyant mechanisms with respect to the 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 (October 13, 2018). 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)

Google Inc., New York ( email )

111 8th Ave
New York, NY 10011
United States

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