Approximately Optimal Mechanism Design

Tim Roughgarden, Inbal Talgam-Cohen

Research output: Contribution to journalReview articlepeer-review


The field of optimal mechanism design enjoys a beautiful and well-developed theory, as well as several killer applications. Rules of thumb produced by the field influence everything from how governments sell wireless spectrum licenses to how the major search engines auction off online advertising. There are, however, some basic problems for which the traditional optimal mechanism design approach is ill suitedmdasheither because it makes overly strong assumptions or because it advocates overly complex designs. This article reviews several common issues with optimal mechanisms, including exorbitant communication, computation, and informational requirements; it also presents several examples demonstrating that relaxing the goal to designing an approximately optimal mechanism allows us to reason about fundamental questions that seem out of reach of the traditional theory.

Original languageEnglish
Pages (from-to)355-381
Number of pages27
JournalAnnual Review of Economics
StatePublished - 2 Aug 2019
Externally publishedYes


  • algorithmic game theory
  • auction theory
  • complexity
  • computational complexity
  • detail dependence
  • multiparameter settings
  • revenue maximization
  • simplicity
  • social welfare


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