A simple mechanism for a budget-constrained buyer

DOI10.1007/978-3-030-04612-5_7zbMATH Open1443.91090arXiv1809.05207OpenAlexW3162639174MaRDI QIDQ2190384FDOQ2190384

Authors: Yu Cheng, Kamesh Munagala, N. V. Gravin, Kangning Wang 

Publication date: 18 June 2020

Abstract: We study a classic Bayesian mechanism design setting of monopoly problem for an additive buyer in the presence of budgets. In this setting a monopolist seller with $m$ heterogeneous items faces a single buyer and seeks to maximize her revenue. The buyer has a budget and additive valuations drawn independently for each item from (non-identical) distributions. We show that when the buyer's budget is publicly known, the better of selling each item separately and selling the grand bundle extracts a constant fraction of the optimal revenue. When the budget is private, we consider a standard Bayesian setting where buyer's budget $b$ is drawn from a known distribution $B$. We show that if $b$ is independent of the valuations and distribution $B$ satisfies monotone hazard rate condition, then selling items separately or in a grand bundle is still approximately optimal. We give a complementary example showing that no constant approximation simple mechanism is possible if budget $b$ can be interdependent with valuations.

Full work available at URL: https://arxiv.org/abs/1809.05207

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zbMATH Keywords

monopolybudgetsBayesian mechanism designadditive buyer

Mathematics Subject Classification ID

Auctions, bargaining, bidding and selling, and other market models (91B26) Mechanism design theory (91B03)

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Cited In (7)

• Mechanism design to the budget constrained buyer: a canonical mechanism approach
• The optimal mechanism for selling to a budget-constrained buyer
• Budget-constrained auctions with heterogeneous items
• On symmetries in multi-dimensional mechanism design
• Selling mechanisms for a financially constrained buyer
• Bayesian optimal knapsack procurement
• Separation in correlation-robust monopolist problem with budget

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