Optimal and robust mechanism design with interdependent values

Tim Roughgarden, Inbal Talgam-Cohen*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


We study interdependent value settings and extend several results from the well-studied independent private values model to these settings. For revenue-optimal mechanism design, we give conditions under which Myerson's virtual value-based mechanism remains optimal with interdependent values. One of these conditions is robustness of the truthfulness and individual rationality guarantees, in the sense that they are required to hold ex-post. We then consider an even more robust class of mechanisms called "prior independent" ("detail free"), and show that, by simply using one of the bidders to set a reserve price, it is possible to extract near-optimal revenue in an interdependent values setting. This shows that a considerable level of robustness is achievable for interdependent values in single-parameter environments.

Original languageEnglish
Pages (from-to)1-34
Number of pages34
JournalACM Transactions on Economics and Computation
Issue number3
StatePublished - Jun 2016
Externally publishedYes


  • Correlated values
  • Interdependence
  • Myerson theory
  • Optimal auctions
  • Prior independence


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