The Randomized Communication Complexity of Randomized Auctions

Abstract: We study the communication complexity of incentive compatible auction-protocols between a monopolist seller and a single buyer with a combinatorial valuation function over $n$ items. Motivated by the fact that revenue-optimal auctions are randomized Tha04,MV10,BCKW10,Pav11,HR15,we focus on the randomized communication complexity of this problem (in contrast to most prior work on deterministic communication). We design simple, incentive compatible, and revenue-optimal auction-protocols whose expected communication complexity is much (in fact infinitely) more efficient than their deterministic counterparts. We also give nearly matching lower bounds on the expected communication complexity of approximately-revenue-optimal auctions. These results follow from a simple characterization of incentive compatible auction-protocols that allows us to prove lower bounds against randomized auction-protocols. In particular, our lower bounds give the first approximation-resistant, exponential separation between communication complexity of incentivizing vs implementing a Bayesian incentive compatible social choice rule, settling an open question of Fadel and Segal [FS09].