Optimal Deterministic Mechanisms for an Additive Buyer

Moshe Babaioff, Noam Nisan, Aviad Rubinstein

We study revenue maximization by deterministic mechanisms for the simplest case for which Myerson's characterization does not hold: a single seller selling two items, with independently distributed values, to a single additive buyer. We prove that optimal mechanisms are submodular and hence monotone. Furthermore, we show that in the IID case, optimal mechanisms are symmetric. Our characterizations are surprisingly non-trivial, and we show that they fail to extend in several natural ways, e.g. for correlated distributions or more than two items. In particular, this shows that the optimality of symmetric mechanisms does not follow from the symmetry of the IID distribution.

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