Approximately efficient bilateral trade
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Publication:6083526
DOI10.1145/3519935.3520054arXiv2111.03611OpenAlexW3212368353MaRDI QIDQ6083526
Author name not available (Why is that?)
Publication date: 8 December 2023
Published in: Proceedings of the 54th Annual ACM SIGACT Symposium on Theory of Computing (Search for Journal in Brave)
Abstract: We study bilateral trade between two strategic agents. The celebrated result of Myerson and Satterthwaite states that in general, no incentive-compatible, individually rational and weakly budget balanced mechanism can be efficient. I.e., no mechanism with these properties can guarantee a trade whenever buyer value exceeds seller cost. Given this, a natural question is whether there exists a mechanism with these properties that guarantees a constant fraction of the first-best gains-from-trade, namely a constant fraction of the gains-from-trade attainable whenever buyer's value weakly exceeds seller's cost. In this work, we positively resolve this long-standing open question on constant-factor approximation, mentioned in several previous works, using a simple mechanism.
Full work available at URL: https://arxiv.org/abs/2111.03611
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