Approximately optimal mechanism design via differential privacy

Abstract

We study the implementation challenge in an abstract interdependent values model and an arbitrary objective function. We design a generic mechanism that allows for approximate optimal implementation of insensitive objective functions in ex-post Nash equilibrium. If, furthermore, values are private then the same mechanism is strategy proof. We cast our results onto two specific models: pricing and facility location. The mechanism we design is optimal up to an additive factor of the order of magnitude of one over the square root of the number of agents and involves no utility transfers.