research-article

A Simple and Approximately Optimal Mechanism for an Additive Buyer

Authors:

Moshe Babaioff,

Nicole Immorlica,

Brendan Lucier,

S. Matthew WeinbergAuthors Info & Claims

Journal of the ACM (JACM), Volume 67, Issue 4

Article No.: 24, Pages 1 - 40

https://doi.org/10.1145/3398745

Published: 16 June 2020 Publication History

Abstract

We consider a monopolist seller with n heterogeneous items, facing a single buyer. The buyer has a value for each item drawn independently according to (non-identical) distributions, and her value for a set of items is additive. The seller aims to maximize his revenue.

We suggest using the a priori better of two simple pricing methods: selling the items separately, each at its optimal price, and bundling together, in which the entire set of items is sold as one bundle at its optimal price. We show that for any distribution, this mechanism achieves a constant-factor approximation to the optimal revenue. Beyond its simplicity, this is the first computationally tractable mechanism to obtain a constant-factor approximation for this multi-parameter problem. We additionally discuss extensions to multiple buyers and to valuations that are correlated across items.

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Cowgill B(2024)Matching Workers in OrganizationsSSRN Electronic Journal10.2139/ssrn.4729093Online publication date: 2024
https://doi.org/10.2139/ssrn.4729093
Wang S(2024)The Power of Simple Menus in Robust Selling MechanismsManagement Science10.1287/mnsc.2023.03738Online publication date: 27-Sep-2024
https://doi.org/10.1287/mnsc.2023.03738
Haghpanah NKuvalekar ALipnowski E(2024)Buying from a GroupAmerican Economic Review10.1257/aer.20230914114:8(2596-2632)Online publication date: 1-Aug-2024
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Index Terms

A Simple and Approximately Optimal Mechanism for an Additive Buyer
1. Theory of computation
  1. Theory and algorithms for application domains
    1. Algorithmic game theory and mechanism design
      1. Algorithmic mechanism design

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Published In

cover image Journal of the ACM

Journal of the ACM Volume 67, Issue 4

August 2020

265 pages

ISSN:0004-5411

EISSN:1557-735X

DOI:10.1145/3403612

Editor:
Éva Tardos
Cornell University

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Copyright © 2020 ACM.

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Publication History

Published: 16 June 2020

Accepted: 01 May 2020

Revised: 01 December 2019

Received: 01 January 2019

Published in JACM Volume 67, Issue 4

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Cited By

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https://doi.org/10.1287/mnsc.2023.03738
Haghpanah NKuvalekar ALipnowski E(2024)Buying from a GroupAmerican Economic Review10.1257/aer.20230914114:8(2596-2632)Online publication date: 1-Aug-2024
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Gonczarowski YThomas CMohar BShinkar IO'Donnell R(2024)Structural Complexities of Matching MechanismsProceedings of the 56th Annual ACM Symposium on Theory of Computing10.1145/3618260.3649737(455-466)Online publication date: 10-Jun-2024
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Wang TDütting PIvanov DTalgam-Cohen IParkes DOh ANaumann TGloberson ASaenko KHardt MLevine S(2023)Deep contract design via discontinuous networksProceedings of the 37th International Conference on Neural Information Processing Systems10.5555/3666122.3668995(65818-65836)Online publication date: 10-Dec-2023
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Gallego GIravani MTalebian M(2023)Breaking Boundaries: A Novel Heuristic for Bundle Pricing with General Product Inter-relatednessSSRN Electronic Journal10.2139/ssrn.4575583Online publication date: 2023
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