Private Interdependent Valuations
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We consider the single-item interdependent value setting, where there is a monopolist, n buyers, and each buyer has a private signal s_i describing a piece of information about the item. Each bidder i also has a valuation function v_i(s_1,…,s_n) mapping the (private) signals of all buyers to a positive real number representing their value for the item. This setting captures scenarios where the item's information is asymmetric or dispersed among agents, such as in competitions for oil drilling rights, or in auctions for art pieces. Due to the increased complexity of this model compared to standard private values, it is generally assumed that each bidder's valuation function v_i is public knowledge. But in many situations, the seller may not know how a bidder aggregates signals into a valuation. In this paper, we design mechanisms that guarantee approximately-optimal social welfare while satisfying ex-post incentive compatibility and individual rationality for the case where the valuation functions are private to the bidders. When the valuations are public, it is possible for optimal social welfare to be attained by a deterministic mechanism under a single-crossing condition. In contrast, when the valuations are the bidders' private information, we show that no finite bound can be achieved by any deterministic mechanism even under single-crossing. Moreover, no randomized mechanism can guarantee better than an n-approximation. We thus consider valuation functions that are submodular over signals (SOS), introduced in the context of combinatorial auctions in a recent breakthrough paper by Eden et al. [EC'19]. Our main result is an O(log^2 n)-approximation for buyers with private signals and valuations under the SOS condition. We also give a tight Θ(k)-approximation for the case each agent's valuation depends on at most k other signals even for unknown k.
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