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- Title
Algorithmic Mechanism Design With Investment.
- Authors
Akbarpour, Mohammad; Kominers, Scott Duke; Li, Kevin Michael; Li, Shengwu; Milgrom, Paul
- Abstract
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 in the allocation problem but guarantee nothing when accounting for investment incentives. An algorithm's allocative and investment guarantees coincide if and only if its confirming negative externalities are sufficiently small. We introduce fast approximation algorithms for the knapsack problem that have no confirming negative externalities and guarantees close to 100% for both allocation and investment.
- Subjects
APPROXIMATION algorithms; KNAPSACK problems; COMBINATORIAL optimization; EXTERNALITIES
- Publication
Econometrica, 2023, Vol 91, Issue 6, p1969
- ISSN
0012-9682
- Publication type
Article
- DOI
10.3982/ECTA19559