Quantization in Economics: Mechanism Design with Limited Information
Feb 08, 2013
from 11:00 AM to 12:30 PM
|Where||Engr. IV Bldg., Tesla Room 53-125|
|Contact Name||Prof. van der Schaar|
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In this talk, we present a case where ideas from data compression, namely those from quantization, are used to solve open problems regarding mechanism design with limited information in the field of microeconomics. Specifically, we analyze a nonlinear economic pricing model with limited information. A seller offers a menu with a finite number n of choices to a continuum of buyers with a continuum of possible valuations. By revealing an underlying connection to quantization theory, we present necessary conditions that the optimal finite menus for the socially eff icient and revenue-maximizing mechanisms, respectively, must satisfy. In both cases, we provide an estimate of the loss resulting from the use of finite n-class menus. We show that the losses converge to zero at a rate proportional to 1/n^2 as n becomes large. We then extend our nonlinear pricing model to the multi-product environment, where vector quantization can be used to jointly design finite menus for social welfare and revenue maximization in multiple dimensions. We show that losses resulting from the use of d-dimensional M-class menus converge to zero at a rate proportional to d/M^(2/d) as M becomes large.
Join work with Dirk Bergemann (Yale), Yun Xu (Yale), and Ji Shen (London School of Economics)
Edmund Yeh received his B.S. in Electrical Engineering with Distinction from Stanford University in 1994, his M.Phil in Engineering from the University of Cambridge in 1995, and his Ph.D. in Electrical Engineering and Computer Science from MIT under Professor Robert Gallager in 2001. Since July 2011, he has been Associate Professor of Electrical and Computer Engineering at Northeastern University. Previously, he was Assistant and Associate Professor of Electrical Engineering, Computer Science, and Statistics at Yale University. He has held visiting positions at MIT, Princeton, University of California at Berkeley, Swiss Federal Institute of Technology Lausanne (EPFL), and Technical University of Munich. Professor Yeh is the recipient of the Alexander von Humboldt Research Fellowship, the Army Research Office Young Investigator Award, the Winston Churchill Scholarship, the National Science Foundation and Office of Naval Research Graduate Fellowships, the Barry M. Goldwater Scholarship, the Frederick Emmons Terman Engineering Scholastic Award, and the President's Award for Academic Excellence (Stanford University). He is a Senior Member of the IEEE, a member of Phi Beta Kappa and Tau Beta Pi. He received the Best Paper Award at the IEEE International Conference on Ubiquitous and Future Networks (ICUFN), Phuket, Thailand, July 2012. Professor Yeh serves as the Secretary of the Board of Governors of the IEEE Information Theory Society. He is an Associate Editor of IEEE Transactions on Mobile Computing. He serves as Guest Editor-in-Chief of the Special Issue on Wireless Networks for Internet Mathematics, and a Guest Editor of the Special Series on Smart Grid Communications for IEEE Journal on Selected Areas in Communications.