On the Limitations of Greedy Mechanism Design for Truthful Combinatorial Auctions

Abstract

We study mechanisms for the combinatorial auction (CA) problem, in which m objects are sold to rational agents and the goal is to maximize social welfare. Of particular interest is the special case of s -CAs, where agents are interested in sets of size at most s , for which a simple greedy algorithm obtains an s + 1 approximation, but no polynomial time deterministic truthful mechanism is known to attain an approximation ratio better than O ( m /√log m ). We view this not only as an extreme gap between the power of greedy auctions and truthful greedy auctions, but also as exemplifying the gap between the known power of truthful and non-truthful polynomial time deterministic algorithms. We associate the notion of greediness with a broad class of algorithms, known as priority algorithms, which encapsulate many natural auction methods. This motivates us to ask: how well can a truthful greedy algorithm approximate the optimal social welfare for CA problems? We show that no truthful greedy priority algorithm can obtain an approximation to the CA problem that is sublinear in m , even for s -CAs with s ≥ 2. Our inapproximations are independent of any time constraints on the mechanism and are purely a consequence of the greedy-type restriction. We conclude that any truthful combinatorial auction mechanism with a non-trivial approximation factor must fall outside the scope of many natural auction methods.