Characterization of Incentive Compatibility of an Ex-Ante Constrained Player
Computer Science and Game Theory
2022-03-01 v2
Abstract
We consider a variant of the standard Bayesian mechanism, where players evaluate their outcomes and constraints in an ex-ante manner. Such a model captures a major form of modern online advertising where an advertiser is concerned with her/his expected utility over a time period and her/his type may change over time. We are interested in the incentive compatibility (IC) problem of such Bayesian mechanism. Under very mild conditions on the mechanism environments, we give a full characterization of IC via the taxation principle and show, perhaps surprisingly, that such IC mechanisms are fully characterized by the so-called auto-bidding mechanisms, which are pervasively fielded in the online advertising industry.
Keywords
Cite
@article{arxiv.2201.11027,
title = {Characterization of Incentive Compatibility of an Ex-Ante Constrained Player},
author = {Bonan Ni and Pingzhong Tang},
journal= {arXiv preprint arXiv:2201.11027},
year = {2022}
}