Revenue Guarantee Equivalence between Dominant-Strategy and Bayesian Mechanisms

Nir Bachrach, Yi-Chun Chen, Inbal Talgam-Cohen, Xiangqian Yang and Wanchang Zhang

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Abstract: In auction design with limited information about bidders' value distributions, we provide an optimality foundation for dominant-strategy mechanisms. We show that simple dominant-strategy incentive compatible (DIC) mechanisms--either a second-price auction with a random reserve or the standard second-price auction without a reserve--achieve a revenue guarantee equal to the worst-case optimal revenue attainable by Bayesian incentive compatible (BIC) mechanisms, thereby establishing a robust form of DIC-BIC equivalence.

Date: 2026-10
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