Paper detail

Revenue Monotonicity Under Misspecified Bidders

We investigate revenue guarantees for auction mechanisms in a model where a distribution is specified for each bidder, but only some of the distributions are correct. The subset of bidders whose distribution is correctly specified (henceforth, the "green bidders") is unknown to the auctioneer. The question we address is whether the auctioneer can run a mechanism that is guaranteed to obtain at least as much revenue, in expectation, as would be obtained by running an optimal mechanism on the green bidders only. For single-parameter feasibility environments, we find that the answer depends on the feasibility constraint. For matroid environments, running the optimal mechanism using all the specified distributions (including the incorrect ones) guarantees at least as much revenue in expectation as running the optimal mechanism on the green bidders. For any feasibility constraint that is not a matroid, there exists a way of setting the specified distributions and the true distributions such that the opposite conclusion holds.