Bernoulli factories and black-box reductions in mechanism design

Shaddin Dughmi, Jason D Hartline, Robert Kleinberg, Rad Niazadeh

Research output: Chapter in Book/Report/Conference proceedingConference contribution

13 Scopus citations


We provide a polynomial time reduction from Bayesian incentive compatible mechanism design to Bayesian algorithm design for welfare maximization problems. Unlike prior results, our reduction achieves exact incentive compatibility for problems with multidimensional and continuous type spaces. The key technical barrier preventing exact incentive compatibility in prior black-box reductions is that repairing violations of incentive constraints requires understanding the distribution of the mechanism's output, which is typically #P-hard to compute. Reductions that instead estimate the output distribution by sampling inevitably suffer from sampling error, which typically precludes exact incentive compatibility. We overcome this barrier by employing and generalizing the computational model in the literature on Bernoulli Factories. In a Bernoulli factory problem, one is given a function mapping the bias of an "input coin" to that of an "output coin", and the challenge is to efficiently simulate the output coin given only sample access to the input coin. Consider a generalization which we call the expectations from samples computational model, in which a problem instance is specified by a function mapping the expected values of a set of input distributions to a distribution over outcomes. The challenge is to give a polynomial time algorithm that exactly samples from the distribution over outcomes given only sample access to the input distributions. In this model, we give a polynomial time algorithm for the function given by exponential weights: expected values of the input distributions correspond to the weights of alternatives and we wish to select an alternative with probability proportional to an exponential function of its weight. This algorithm is the key ingredient in designing an incentive compatible mechanism for bipartite matching, which can be used to make the approximately incentive compatible reduction of Hartline et al. [12] exactly incentive compatible.

Original languageEnglish (US)
Title of host publicationSTOC 2017 - Proceedings of the 49th Annual ACM SIGACT Symposium on Theory of Computing
EditorsPierre McKenzie, Valerie King, Hamed Hatami
PublisherAssociation for Computing Machinery
Number of pages12
ISBN (Electronic)9781450345286
StatePublished - Jun 19 2017
Event49th Annual ACM SIGACT Symposium on Theory of Computing, STOC 2017 - Montreal, Canada
Duration: Jun 19 2017Jun 23 2017

Publication series

NameProceedings of the Annual ACM Symposium on Theory of Computing
VolumePart F128415
ISSN (Print)0737-8017


Other49th Annual ACM SIGACT Symposium on Theory of Computing, STOC 2017


  • BIC reduction
  • Bayesian mechanism design
  • Bernoulli factory
  • Online convex programming

ASJC Scopus subject areas

  • Software


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