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Algorithmic Mechanism Design with Investment

Paul Milgrom, Stanford University
Friday, March 24, 2023
2:30-4:00 PM
We study the investment incentives created by truthful mechanisms that allocate resources using approximation algorithms. Some approximation algorithms guarantee nearly 100% of the optimal welfare, but have only a zero guarantee when one bidder can invest before participating. An algorithm’s worst-case allocative and investment guarantees coincide if and only if that algorithm’s confirming negative externalities are sufficiently small. We introduce new fast approximation algorithms for the knapsack problem that have no confirming negative externalities, with guarantees close to 100% both with and without investments.
Building: Lorch Hall
Event Link:
Event Password: theory
Event Type: Workshop / Seminar
Tags: Economics, Microeconomics, seminar, Theory
Source: Happening @ Michigan from Department of Economics, Economic Theory, Department of Economics Seminars