#### Date of Original Version

9-2007

#### Type

Article

#### Abstract or Description

We use techniques from sample-complexity in machine learning to reduce problems of incentive-compatible mechanism design to standard algorithmic questions, for a broad class of revenue-maximizing pricing problems. Our reductions imply that for these problems, given an optimal (or -approximation) algorithm for an algorithmic pricing problem, we can convert it into a (1+ε)-approximation (or β(1+ε) approximation) for the incentive-compatible mechanism design problem, so long as the number of bidders is sufficiently large as a function of an appropriate measure of complexity of the class of allowable pricings. We apply these results to the problem of auctioning a digital good, to the attribute auction problem which includes a wide variety of discriminatory pricing problems, and to the problem of item-pricing in unlimited-supply combinatorial auctions. From a machine learning perspective, these settings present several challenges: in particular, the “loss function” is discontinuous, is asymmetric, and has a large range. We address these issues in part by introducing a new form of covering-number bound that is especially well-suited to these problems and may be of independent interest.

#### DOI

10.1016/j.jcss.2007.08.002