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arXiv · 2510.05474

Hallucinating Flows for Optimal Mechanisms

Marios Mertzanidis·Athina Terzoglou
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Abstract

Myerson's seminal characterization of the revenue-optimal auction for a single item \cite{myerson1981optimal} remains a cornerstone of mechanism design. However, generalizing this framework to multi-item settings has proven exceptionally challenging. Even under restrictive assumptions, closed-form characterizations of optimal mechanisms are rare and are largely confined to the single-agent case \cite{pavlov2011optimal,hart2017approximate, daskalakis2018transport, GIANNAKOPOULOS2018432}, departing from the two-item setting only when prior distributions are uniformly distributed \cite{manelli2006bundling, daskalakis2017strong,giannakopoulos2018sjm}. In this work, we build upon the bi-valued setting introduced by Yao \cite{YAO_BIC_DSIC}, where each item's value has support 2 and lies in $\{a, b\}$. Yao's result provides the only known closed-form optimal mechanism for multiple agents. We extend this line of work along three natural axes, establishing the first closed-form optimal mechanisms in each of the following settings: (i) $n$ i.i.d. agents and $m$ i.i.d. items (ii) $n$ non-i.i.d. agents and two i.i.d. items and (iii) $n$ i.i.d. agents and two non-i.i.d. items. Our results lie at the limit of what is considered possible, since even with a single agent and m bi-valued non-i.i.d. items, finding the optimal mechanism is $\#P$-Hard \cite{daskalakis2014complexity, xi2018soda}. We finally generalize the discrete analog of a result from~\cite{daskalakis2017strong}, showing that for a single agent with $m$ items drawn from arbitrary (non-identical) discrete distributions, grand bundling is optimal when all item values are sufficiently large. We further show that for any continuous product distribution, grand bundling achieves $\mathrm{OPT} - \epsilon$ revenue for large enough values.

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Marios Mertzanidis, Athina Terzoglou. 2025-10-07. Hallucinating Flows for Optimal Mechanisms. https://arxiv.org/abs/2510.05474

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