Beating Greedy For Approximating Reserve Prices in Multi-Unit VCG Auctions

TL;DR

This paper presents a new polynomial-time algorithm that improves the approximation factor for finding personalized reserve prices in multi-unit VCG auctions with correlated buyers, surpassing previous greedy and LP-based methods.

Contribution

The paper introduces a novel LP formulation and two rounding schemes that achieve a 0.63-approximation, improving over the prior 0.5 and 0.68 approximations.

Findings

New LP-based algorithm with 0.63 approximation factor

Proves the no-reserve case is a 0.63-approximation

Demonstrates previous LP-based method does not beat greedy in general

Abstract

We study the problem of finding personalized reserve prices for unit-demand buyers in multi-unit eager VCG auctions with correlated buyers. The input to this problem is a dataset of submitted bids of $n$ buyers in a set of auctions. The goal is to find a vector of reserve prices, one for each buyer, that maximizes the total revenue across all auctions. Roughgarden and Wang (2016) showed that this problem is APX-hard but admits a greedy $\frac{1}{2}$-approximation algorithm. Later, Derakhshan, Golrezai, and Paes Leme (2019) gave an LP-based algorithm achieving a $0.68$-approximation for the (important) special case of the problem with a single-item, thereby beating greedy. We show in this paper that the algorithm of Derakhshan et al. in fact does not beat greedy for the general multi-item problem. This raises the question of whether or not the general problem admits a better-than-$\frac{1}{2}$ approximation. In this paper, we answer this question in the affirmative and provide a polynomial-time algorithm with a significantly better approximation-factor of $0.63$. Our solution is based on a novel linear programming formulation, for which we propose two different rounding schemes. We prove that the best of these two and the no-reserve case (all-zero vector) is a $0.63$-approximation.