On the Power of Randomization in Algorithmic Mechanism Design

In many settings the power of truthful mechanisms is severely bounded. In this paper we use randomization to overcome this problem. In particular, we construct an FPTAS for multi-unit auctions that is truthful in expectation, whereas there is evidence that no polynomial-time truthful deterministic mechanism provides an approximation ratio better than 2. We also show for the first time that truthful in expectation polynomial-time mechanisms are provably stronger than polynomial-time universally truthful mechanisms. Specifically, we show that there is a setting in which: (1) there is a non-polynomial time truthful mechanism that always outputs the optimal solution, and that (2) no universally truthful randomized mechanism can provide an approximation ratio better than 2 in polynomial time, but (3) an FPTAS that is truthful in expectation exists. ∗ Supported by the Adams Fellowship Program of the Israel Academy of Sciences and Humanities, and by a grant from the Israeli Academy of Sc...

• Type: Conference
• Year: 2009
• Where: FOCS
• Authors: Shahar Dobzinski, Shaddin Dughmi
• Keywords: FOCS 2009, Theoretical Computer Science, Truthful, Truthful Deterministic Mechanism, Truthful Mechanism