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Approximation in Mechanism Design


  • Jason D. Hartline


This paper considers three challenge areas for mechanism design and describes the role approximation plays in resolving them. Challenge 1: optimal mechanisms are finely tuned to precise details of the distribution on agent preferences. Challenge 2: in environments with multi-dimensional agent preferences economic analysis has failed to provide general characterizations optimal mechanisms. Challenge 3: optimal mechanisms are parameterized by unrealistic knowledge of the distribution of agents' private preferences. This paper surveys positive resolutions to these challenges with emphasis on basic techniques and their relevance to theory and practice.

Suggested Citation

  • Jason D. Hartline, 2012. "Approximation in Mechanism Design," American Economic Review, American Economic Association, vol. 102(3), pages 330-336, May.
  • Handle: RePEc:aea:aecrev:v:102:y:2012:i:3:p:330-36

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    References listed on IDEAS

    1. Manelli, Alejandro M. & Vincent, Daniel R., 2007. "Multidimensional mechanism design: Revenue maximization and the multiple-good monopoly," Journal of Economic Theory, Elsevier, vol. 137(1), pages 153-185, November.
    2. Coase, Ronald H, 1972. "Durability and Monopoly," Journal of Law and Economics, University of Chicago Press, vol. 15(1), pages 143-149, April.
    3. Ilya Segal, 2003. "Optimal Pricing Mechanisms with Unknown Demand," American Economic Review, American Economic Association, vol. 93(3), pages 509-529, June.
    4. Thanassoulis, John, 2004. "Haggling over substitutes," Journal of Economic Theory, Elsevier, vol. 117(2), pages 217-245, August.
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    Cited by:

    1. Rahul Deb & Mallesh Pai, 2013. "Symmetric Auctions," Working Papers tecipa-486, University of Toronto, Department of Economics.
    2. Devanur, Nikhil R. & Hartline, Jason D. & Yan, Qiqi, 2015. "Envy freedom and prior-free mechanism design," Journal of Economic Theory, Elsevier, vol. 156(C), pages 103-143.
    3. Lazzati, Natalia & Van Essen, Matt, 2014. "A nearly optimal auction for an uninformed seller," Economics Letters, Elsevier, vol. 122(3), pages 396-399.
    4. Babaioff, Moshe & Blumrosen, Liad & Roth, Aaron, 2015. "Auctions with online supply," Games and Economic Behavior, Elsevier, vol. 90(C), pages 227-246.
    5. repec:eee:gamebe:v:103:y:2017:i:c:p:225-253 is not listed on IDEAS

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