TY - GEN

T1 - Optimal auctions with positive network externalities

AU - Haghpanah, Nima

AU - Immorlica, Nicole

AU - Mirrokni, Vahab

AU - Munagala, Kamesh

PY - 2011

Y1 - 2011

N2 - We consider the problem of designing auctions in social networks for goods that exhibit single-parameter submodular network externalities in which a bidder's value for an outcome is a fixed private type times a known submodular function of the allocation of his friends. Externalities pose many issues that are hard to address with traditional techniques; our work shows how to resolve these issues in a specific setting of particular interest. We operate in a Bayesian environment and so assume private values are drawn according to known distributions. We prove that the optimal auction is APX-hard. Thus we instead design auctions whose revenue approximates that of the optimal auction. Our main result considers step-function externalities in which a bidder's value for an outcome is either zero, or equal to his private type if at least one friend has the good. For these settings, we provide a e/e+1-approximation. We also give a $0.25$-approximation auction for general single-parameter submodular network externalities, and discuss optimizing over a class of simple pricing strategies.

AB - We consider the problem of designing auctions in social networks for goods that exhibit single-parameter submodular network externalities in which a bidder's value for an outcome is a fixed private type times a known submodular function of the allocation of his friends. Externalities pose many issues that are hard to address with traditional techniques; our work shows how to resolve these issues in a specific setting of particular interest. We operate in a Bayesian environment and so assume private values are drawn according to known distributions. We prove that the optimal auction is APX-hard. Thus we instead design auctions whose revenue approximates that of the optimal auction. Our main result considers step-function externalities in which a bidder's value for an outcome is either zero, or equal to his private type if at least one friend has the good. For these settings, we provide a e/e+1-approximation. We also give a $0.25$-approximation auction for general single-parameter submodular network externalities, and discuss optimizing over a class of simple pricing strategies.

UR - http://www.scopus.com/inward/record.url?scp=79959600624&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=79959600624&partnerID=8YFLogxK

U2 - 10.1145/1993574.1993577

DO - 10.1145/1993574.1993577

M3 - Conference contribution

AN - SCOPUS:79959600624

SN - 9781450302616

T3 - Proceedings of the ACM Conference on Electronic Commerce

SP - 11

EP - 20

BT - EC'11 - Proceedings of the 12th ACM Conference on Electronic Commerce

T2 - 12th ACM Conference on Electronic Commerce, EC'11

Y2 - 5 June 2011 through 9 June 2011

ER -