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Itai Ashlagi
Mediators in Position Auctions
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A mediator is a reliable entity, which plays on behalf of the players who give her the right of play. The mediator is guaranteed to behave in a pre-specified way based on messages received from the agents.
However, a mediator can not enforce behavior; that is, agents can play in the game directly without the mediator's help. A mediator generates a new game for the players, the mediated game. The outcome in the original game of an equilibrium in the mediated game is called a mediated equilibrium.
Monderer and Tennenholtz defined a mediator for games with complete information. We extend the theory of mediators to games with incomplete information, and use the new theory to study position auctions, a central topic in practical and theoretical electronic commerce. We provide minimal sets of conditions on position auctions, which are sufficient to guarantee that the VCG outcome function is a mediated equilibrium in these position auctions.
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