Reinforcement mechanism design

Abstract

We put forward a modeling and algorithmic framework to design and optimize mechanisms in dynamic industrial environments where a designer can make use of the data generated in the process to automatically improve future design. Our solution, coined reinforcement mechanism design, is rooted in game theory but incorporates recent AI techniques to get rid of nonrealistic modeling assumptions and to make automated optimization feasible. We instantiate our framework on the key application scenarios of Baidu and Taobao, two of the largest mobile app companies in China. For the Taobao case, our framework automatically designs mechanisms that allocate buyer impressions for the e-commerce website; for the Baidu case, our framework automatically designs dynamic reserve pricing schemes of advertisement auctions of the search engine. Experiments show that our solutions outperform the state-of-the-art alternatives and those currently deployed, under both scenarios.