Efficiency-Revenue Trade-Offs in Auctions

Ilias Diakonikolas, Christos Papadimitriou, George Pierrakos, Yaron Singer

Research output: Chapter in Book/Report/Conference proceedingConference contribution


When agents with independent priors bid for a single item, Myerson’s optimal auction maximizes expected revenue, whereas Vickrey’s second-price auction optimizes social welfare. We address the natural question of trade-offs between the two criteria, that is, auctions that optimize, say, revenue under the constraint that the welfare is above a given level. If one allows for randomized mechanisms, it is easy to see that there are polynomial-time mechanisms that achieve any point in the trade-off (the Pareto curve) between revenue and welfare. We investigate whether one can achieve the same guarantees using deterministic mechanisms. We provide a negative answer to this question by showing that this is a (weakly) NP-hard problem. On the positive side, we provide polynomial-time deterministic mechanisms that approximate with arbitrary precision any point of the trade-off between these two fundamental objectives for the case of two bidders, even when the valuations are correlated arbitrarily. The major problem left open by our work is whether there is such an algorithm for three or more bidders with independent valuation distributions.
Original languageEnglish
Title of host publicationAutomata, Languages, and Programming
Subtitle of host publication39th International Colloquium, ICALP 2012, Warwick, UK, July 9-13, 2012, Proceedings, Part II
EditorsArtur Czumaj, Kurt Mehlhorn, Andrew Pitts, Roger Wattenhofer
PublisherSpringer Berlin Heidelberg
Number of pages12
ISBN (Electronic)978-3-642-31585-5
ISBN (Print)978-3-642-31584-8
Publication statusPublished - 2012

Publication series

NameLecture Notes in Computer Science
PublisherSpringer Berlin Heidelberg


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