Algorithmic mechanism design: Difference between revisions

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'''Algorithmic mechanism design''' ('''AMD''') lies at the intersection of economic [[game theory]], [[optimization]], and [[computer science]]. The prototypical problem in [[mechanism design]] is to design a system for multiple selfish participants, such that the participants' selfish actions at equilibrium lead to good system performance. Typical objectives studied include revenue maximization and social welfare maximization. Algorithmic mechanism design differs from classical economic mechanism design in several respects. It typically employs the analytic tools of [[theoretical computer science]], such as [[worst case analysis]] and [[approximation ratio]]s, in contrast to classical mechanism design in economics which often makes distributional assumptions about the agents. It also considers computational constraints to be of central importance: mechanisms that cannot be efficiently implemented in polynomial time are not considered to be viable solutions to a mechanism design problem. This often, for example, rules out the classic economic mechanism, the [[Vickrey–Clarke–Groves auction]].

'''Algorithmic mechanism design''' ('''AMD''') lies at the intersection of economic [[game theory]] and [[computer science]].

==History==

[[Noam Nisan]] and Amir Ronen, from the [[Hebrew University of Jerusalem]], first coined "Algorithmic mechanism design" in a research paper published in 1999.<ref name="nisan">{{citation

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| year = 1999| doi = 10.1145/301250.301287 | isbn = 978-1581130676 }}.</ref><ref name=journal_version>{{Cite journal|doi=10.1006/game.1999.0790|title=Algorithmic Mechanism Design|journal=Games and Economic Behavior|volume=35|issue=1–2|pages=166–196|year=2001|last1=Nisan|first1=Noam|last2=Ronen|first2=Amir}}</ref>

It combines ideas such as utility maximization and [[mechanism design]] from [[economics]], rationality and [[Nash equilibrium]] from game theory, with such concepts as [[complexity]] and algorithm design from [[discrete mathematics]] and theoretical [[computer science]]. Examples of topics include networking, [[peering]], online auctions and exchanges, online advertising, and search engine's page ranking.

Algorithmic mechanism design differs from classical economic mechanism design in several respects. It typically employs the analytic tools of [[theoretical computer science]], such as [[worst case analysis]] and [[approximation ratio]]s, in contrast to classical mechanism design in economics which often makes distributional assumptions about the agents. It also considers computational constraints to be of central importance: mechanisms that cannot be efficiently implemented in polynomial time are not considered to be viable solutions to a mechanism design problem. This often, for example, rules out the classic economic mechanism, the [[Vickrey–Clarke–Groves auction]].

==See also==