Optimal Multi-Dimensional Mechanisms are not Locally-Implementable

TL;DR

This paper demonstrates that optimal multi-dimensional auction mechanisms cannot be implemented locally, requiring full distribution knowledge, unlike simpler single-dimensional cases where only limited information is needed.

Contribution

It proves that optimal multi-dimensional mechanisms are inherently non-local, needing complete distribution data, contrasting with the local-implementability of single-dimensional mechanisms.

Findings

Optimal multi-dimensional mechanisms require full distribution knowledge.

Single-dimensional mechanisms are locally-implementable using limited bits.

Even with just two bidders, the non-locality phenomenon persists.

Abstract

We introduce locality: a new property of multi-bidder auctions that formally separates the simplicity of optimal single-dimensional multi-bidder auctions from the complexity of optimal multi-dimensional multi-bidder auctions. Specifically, consider the revenue-optimal, Bayesian Incentive Compatible auction for buyers with valuations drawn from $\vec{D}:=\times_i D_i$, where each distribution has support-size $n$. This auction takes as input a valuation profile $\vec{v}$ and produces as output an allocation of the items and prices to charge, $Opt_{\vec{D}}(\vec{v})$. When each $D_i$ is single-dimensional, this mapping is locally-implementable: defining each input $v_i$ requires $\Theta(\log n)$ bits, and $Opt_{\vec{D}}(\vec{v})$ can be fully determined using just $\Theta(\log n)$ bits from each $D_i$. This follows immediately from Myerson's virtual value theory [Mye81]. Our main result establishes that optimal multi-dimensional mechanisms are not locally-implementable: in order to determine the output $Opt_{\vec{D}}(\vec{v})$ on one particular input $\vec{v}$, one still needs to know (essentially) the entire distribution $\vec{D}$. Formally, $\Omega(n)$ bits from each $D_i$ is necessary: (essentially) enough to fully describe $D_i$, and exponentially more than the $\Theta(\log n)$ needed to define the input $v_i$. We show that this phenomenon already occurs with just two bidders, even when one bidder is single-dimensional, and when the other bidder is barely multi-dimensional. More specifically, the multi-dimensional bidder is ``inter-dimensional'' from the FedEx setting with just two days [FGKK16]. Our techniques are fairly robust: we additionally establish that optimal mechanisms for single-dimensional buyers with budget constraints are not locally-implementable. This occurs with just two bidders, even when one has no budget constraint, and even when the other's budget is public.