Silvio Micali, MIT, USA

Title: Knightian Auctions
Abstract:In an auction, a player may not exactly know his own valuation, nor its distribution. We thus study single-good auctions whose players know their own valuations only within a multiplicative factor (e.g., 10%). The notions of implementation in dominant and undominated strategies are naturally extended to this setting, but their power is vastly different. Namely,
(1) We prove that no dominant-strategy mechanism can guarantee more social welfare than by assigning the good at random; but
(2) We prove a much better performance can be obtained via undominated-strategy mechanisms, and actually provide tight upper and lower bounds for the fraction of the maximum social welfare guaranteable by such mechanisms, whether deterministic or probabilistic.