Abstract
We introduce revenue submodularity, the property that market expansion has diminishing returns on an auction’s expected revenue. We prove that revenue submodularity is generally possible only in matroid markets, that Bayesian-optimal auctions are always revenue-submodular in such markets, and that the VCG mechanism is revenue-submodular in matroid markets with IID bidders and “sufficient competition”. We also give two applications of revenue submodularity: good approximation algorithms for novel market expansion problems, and approximate revenue guarantees for the VCG mechanism with IID bidders.
A working paper featuring special cases of results in this work was presented at the 3rd Workshop on Sponsored Search, May 2007, under the title “Is Efficiency Expensive?”.
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© 2009 ICST Institute for Computer Science, Social Informatics and Telecommunications Engineering
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Dughmi, S., Roughgarden, T., Sundararajan, M. (2009). Revenue Submodularity. In: Das, S., Ostrovsky, M., Pennock, D., Szymanksi, B. (eds) Auctions, Market Mechanisms and Their Applications. AMMA 2009. Lecture Notes of the Institute for Computer Sciences, Social Informatics and Telecommunications Engineering, vol 14. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-03821-1_13
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DOI: https://doi.org/10.1007/978-3-642-03821-1_13
Publisher Name: Springer, Berlin, Heidelberg
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