1. Mechanism Design Ruta Mehta

2. Game design (not video games!) to achieve a desired goal, like fairness, social welfare maximization, etc.

3. Widely Applicable

4. Lets Focus on Voting -> Condorcet’s Paradox!

5. First Preference Majority Tie between a and c

6. Borda Count

7. In General: Social Choice

8. Desired Properties of f

9. Gibbard-Satterthwaite Theorem: If a social choice function is incentive- compatible, where |A|>=3, then it is dictatorship. “Field of Mechanism Design attempts escaping from this impossibility result using various modifications in the model.”

10. Introducing Payment

11. Auction Not even IC

12. Vickery Auction is IC (in DS) Proof on board

13. Open-Outcry Auctions English Auction: Start with a low price and keep increasing until only one buyer is interested. – Equivalent to Vickery auction! Dutch Auction: Start with a very high price where no one is interested. Keep decreasing until someone gets interested. – Equivalent to first price auction!

14. Extensions?

15. General Setting

16. Example: Single Item Auction

17. Vickery-Clarke-Groves Mechanism

18. Properties of VCG Proof on board

19. Clarke Pivot Rule Others welfare without i Others welfare with i

20. Example: Single Item Auction

21. Example: Multiunit Auction

22. Example: Reverse Auction

23. Example: Resource Allocation

24. Example: Multi Item Auction

26. Incentive Compatible

28. Pros and Cons of VCG Best for bidders – Government auctions like road contract, bandwidth allocation May not be efficiently computable – Multi item auction Worst for auctioneer – May get zero payment!

29. Sponsored Search Auctions

31. Ad Auctions Generalized Second Price (GSP) – Google, Yahoo, Bing Bid on keywords – If the user query contains your keyword, your bid qualifies for the auction

32. GSP Auction Setting

33. GSP Auction

34. GSP Properties

35. Locally Envy Free Equilibrium