The Power of Fair Pricing Mechanisms

We explore the revenue capabilities of truthful, monotone (“fair”) allocation and pricing functions for resource-constrained auction mechanisms within a general framework that encompasses unlimited supply auctions, knapsack auctions, and auctions with general non-decreasing convex production cost fu...

Full description

Saved in:
Bibliographic Details
Published inAlgorithmica Vol. 63; no. 3; pp. 634 - 644
Main Authors Chung, Christine, Ligett, Katrina, Pruhs, Kirk, Roth, Aaron
Format Journal Article
LanguageEnglish
Published New York Springer-Verlag 01.07.2012
Subjects
Algorithm Analysis and Problem Complexity
Algorithms
Computer Science
Computer Systems Organization and Communication Networks
Data Structures and Information Theory
Mathematics of Computing
Theory of Computation
Winning Bidder
Price Scheme
Constant Price
Knapsack Problem
Price Mechanism
Online AccessGet full text

Cover

More Information
Summary:We explore the revenue capabilities of truthful, monotone (“fair”) allocation and pricing functions for resource-constrained auction mechanisms within a general framework that encompasses unlimited supply auctions, knapsack auctions, and auctions with general non-decreasing convex production cost functions. We study and compare the revenue obtainable in each fair pricing scheme to the profit obtained by the ideal omniscient multi-price auction. We show that for capacitated knapsack auctions, no constant pricing scheme can achieve any approximation to the optimal profit, but proportional pricing is as powerful as general monotone pricing. In addition, for auction settings with arbitrary bounded non-decreasing convex production cost functions, we present a proportional pricing mechanism which achieves a poly-logarithmic approximation. Unlike existing approaches, all of our mechanisms have fair (monotone) prices, and all of our competitive analysis is with respect to the optimal profit extraction.
ISSN:0178-4617
1432-0541
DOI:10.1007/s00453-011-9587-1