2011/02/17 by Paul Dütting, Felix Fischer, Dütting, Paul +3
Business, Management and Accounting · Computer Science · Decision Sciences · Social Sciences · #Auction Theory and Applications #Consumer Market Behavior and Pricing #Experimental Behavioral Economics Studies #cs.GT
paper · pdf · doi:10.48550/arxiv.1102.3632
arxiv created 2011/02/17 · arxiv updated 2011/02/18
A fundamental result in mechanism design theory, the so-called revelation principle, asserts that for many questions concerning the existence of mechanisms with a given outcome one can restrict attention to truthful direct revelation-mechanisms. In practice, however, many mechanism use a restricted message space. This motivates the study of the tradeoffs involved in choosing simplified mechanisms, which can sometimes bring benefits in precluding bad or promoting good equilibria, and other times impose costs on welfare and revenue. We study the simplicity-expressiveness tradeoff in two representative settings, sponsored search auctions and combinatorial auctions, each being a canonical example for complete information and incomplete information analysis, respectively. We observe that the amount of information available to the agents plays an important role for the tradeoff between simplicity and expressiveness.