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Approximately Optimal Mechanism Design via Differential Privacy

Abstract

We introduce a general technique for obtaining approximately optimal truthful mechanisms implementing general social welfare functions without payments. We combine a differentially private mechanism, which induces efficiency but does not guarantee truthfulness, with a probabilistic mechanism that is truthful yet inefficient. The combined mechanism enjoys the best of both worlds - truthfulness and efficiency. We demonstrate the applicability of our results for addressing open problems in facility location and in the pricing of goods.

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