Algorithmic mechanism design (AMD) lies at the intersection of economic

game theory Game theory is the study of mathematical models of strategic interactions among rational agents. Myerson, Roger B. (1991). ''Game Theory: Analysis of Conflict,'' Harvard University Press, p.&nbs1 Chapter-preview links, ppvii–xi It has appli ...

optimization Mathematical optimization (alternatively spelled ''optimisation'') or mathematical programming is the selection of a best element, with regard to some criterion, from some set of available alternatives. It is generally divided into two subfi ...

, and

computer science Computer science is the study of computation, automation, and information. Computer science spans theoretical disciplines (such as algorithms, theory of computation, information theory, and automation) to Applied science, practical discipli ...

. The prototypical problem in

mechanism design Mechanism design is a field in economics and game theory that takes an objectives-first approach to designing economic mechanisms or incentives, toward desired objectives, in strategic settings, where players act rationally. Because it starts a ...

is to design a system for multiple self-interested participants, such that the participants' self-interested actions at equilibrium lead to good system performance. Typical objectives studied include revenue maximization and social welfare maximization. Algorithmic mechanism design differs from classical economic mechanism design in several respects. It typically employs the analytic tools of

theoretical computer science Theoretical computer science (TCS) is a subset of general computer science and mathematics that focuses on mathematical aspects of computer science such as the theory of computation, lambda calculus, and type theory. It is difficult to circumsc ...

, such as

worst case analysis Worst case analysis was, from 1978 until 1986, a doctrine under which mandated that an environmental impact statement include such an analysis: It led to a 1989 SCOTUS decision, written by John Paul Stevens and reported in ''Robertson v. Methow ...

and

approximation ratio An approximation is anything that is intentionally similar but not exactly equal to something else. Etymology and usage The word ''approximation'' is derived from Latin ''approximatus'', from ''proximus'' meaning ''very near'' and the prefix ' ...

s, in contrast to classical mechanism design in economics which often makes distributional assumptions about the agents. It also considers computational constraints to be of central importance: mechanisms that cannot be efficiently implemented in polynomial time are not considered to be viable solutions to a mechanism design problem. This often, for example, rules out the classic economic mechanism, the

Vickrey–Clarke–Groves auction A Vickrey–Clarke–Groves (VCG) auction is a type of sealed-bid auction of multiple items. Bidders submit bids that report their valuations for the items, without knowing the bids of the other bidders. The auction system assigns the items in a ...

History

Noam Nisan Noam Nisan ( he, נעם ניסן; born June 20, 1961) is an Israeli computer scientist, a professor of computer science at the Hebrew University of Jerusalem. He is known for his research in computational complexity theory and algorithmic game th ...

and Amir Ronen, from the

Hebrew University of Jerusalem The Hebrew University of Jerusalem (HUJI; he, הַאוּנִיבֶרְסִיטָה הַעִבְרִית בִּירוּשָׁלַיִם) is a public research university based in Jerusalem, Israel. Co-founded by Albert Einstein and Dr. Chaim Weiz ...

, first coined "Algorithmic mechanism design" in a research paper published in 1999..

History

See also

References and notes

Further reading