Fine-Grained Buy-Many Mechanisms Are Not Much Better Than Bundling

TL;DR

This paper introduces buy-$k$ mechanisms that interpolate between buy-one and buy-many, showing they can bound revenue gaps with simple mechanisms like bundling, but small menu options may still lead to exponential revenue gaps.

Contribution

The paper defines buy-$k$ mechanisms and proves they limit revenue gaps with bundling, offering new insights into mechanism complexity and revenue approximation.

Findings

Buy-$k$ mechanisms bound revenue gaps to $O(n^2)$ for additive buyers.

Small menu options (k = Θ(n^{1/2-ε})) can still cause exponential revenue gaps.

Buy-$k$ mechanisms overcome the infinite revenue issue of buy-one models.

Abstract

Multi-item revenue-optimal mechanisms are known to be extremely complex, often offering buyers randomized lotteries of goods. In the standard buy-one model, it is known that optimal mechanisms can yield revenue infinitely higher than that of any "simple" mechanism -- the ones with size polynomial in the number of items -- even with just two items and a single buyer (Briest et al. 2015, Hart and Nisan 2017). We introduce a new parameterized class of mechanisms, buy-$k$ mechanisms, which smoothly interpolate between the classical buy-one mechanisms and the recently studied buy-many mechanisms (Chawla et al. 2019, Chawla et al. 2020, Chawla et al. 2022). Buy-$k$ mechanisms allow the buyer to buy up to $k$ many menu options. We show that restricting the seller to the class of buy-$n$ incentive-compatible mechanisms suffices to overcome the bizarre, infinite revenue properties of the buy-one model. Our main result is that the revenue gap with respect to bundling, an extremely simple mechanism, is bounded by $O(n^2)$ for any arbitrarily correlated distribution $\mathcal{D}$ over $n$ items for the case of an additive buyer. Our techniques also allow us to prove similar upper bounds for arbitrary monotone valuations, albeit with an exponential factor in the approximation. On the negative side, we show that allowing the buyer to purchase a small number of menu options does not suffice to guarantee sub-exponential approximations, even when we weaken the benchmark to the optimal buy-$k$ deterministic mechanism. If an additive buyer is only allowed to buy $k = \Theta(n^{1/2-\varepsilon})$ many menu options, the gap between the revenue-optimal deterministic buy-$k$ mechanism and bundling may be exponential in $n$. In particular, this implies that no "simple" mechanism can obtain a sub-exponential approximation in this regime.