The menu complexity of "one-and-a-half-dimensional" mechanism design

Abstract

We study the menu complexity of optimal and approximately-optimal auctions in the context of the "FedEx" problem, a so-called "one-and-a-halfdimensional" setting where a single bidder has both a value and a deadline for receiving an item [FGKK16]. The menu complexity of an auction is equal to the number of distinct (allocation, price) pairs that a bidder might receive [HN13]. We show the following when the bidder has n possible deadlines: Exponential menu complexity is necessary to be exactly optimal: There exist instances where the optimal mechanism has menu complexity ≥ 2n-1. This matches exactly the upper bound provided by Fiat et al.'s algorithm, and resolves one of their open questions [FGKK16].Fully polynomial menu complexity is neces-sary and sufficient for approximation: For all instances, there exists a mechanism guaranteeing a multiplicative (1-n)-approximation to the optimal revenue with menu complexity O(n3=2 q minfn;ln(vmax)g) = O(n2/n), where vmax denotes the largest value in the support of integral distributions. There exist instances where any mechanism guaranteeing a multiplicative (1- O(1=n2))-approximation to the optimal revenue requires menu complexity (n2). Our main technique is the polygon approximation of concave functions [Rot92], and our results here should be of independent interest. We further show how our techniques can be used to resolve an open question of [DW17] on the menu complexity of optimal auctions for a budget-constrained buyer.