Bayesian Incentive Compatibility via Fractional Assignments

Abstract

Very recently, Hartline and Lucier studied single-parameter mechanism design problems in the Bayesian setting. They proposed a black-box reduction that converted Bayesian approximation algorithms into Bayesian-Incentive-Compatible (BIC) mechanisms while preserving social welfare. It remains a major open question if one can find similar reduction in the more important multi-parameter setting. In this paper, we give positive answer to this question when the prior distribution has finite and small support. We propose a black-box reduction for designing BIC multi-parameter mechanisms. The reduction converts any algorithm into an eps-BIC mechanism with only marginal loss in social welfare. As a result, for combinatorial auctions with sub-additive agents we get an eps-BIC mechanism that achieves constant approximation.

22 pages, 1 figure