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  3. American Economic Review
  4. May 2012
  5. Approximation in Mechanism Design

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Approximation in Mechanism Design

  • Jason D. Hartline
American Economic Review
vol. 102, no. 3, May 2012
(pp. 330–36)
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Abstract

This paper considers three challenge areas for mechanism design and describes the role approximation plays in resolving them. Challenge 1: optimal mechanisms are finely tuned to precise details of the distribution on agent preferences. Challenge 2: in environments with multi-dimensional agent preferences economic analysis has failed to provide general characterizations optimal mechanisms. Challenge 3: optimal mechanisms are parameterized by unrealistic knowledge of the distribution of agents' private preferences. This paper surveys positive resolutions to these challenges with emphasis on basic techniques and their relevance to theory and practice.

Citation

Hartline, Jason D. 2012. "Approximation in Mechanism Design." American Economic Review, 102 (3): 330–36. DOI: 10.1257/aer.102.3.330

JEL Classification

  • D82 Asymmetric and Private Information