Monotonic Mechanisms for Selling Multiple Goods

Maximizing the revenue from selling two or more goods has been shown to require the use of $nonmonotonic$ mechanisms, where a higher-valuation buyer may pay less than a lower-valuation one. Here we show that the restriction to $monotonic$ mechanisms may not just lower the revenue, but may in fact yield only a $negligible$ $fraction$ of the maximal revenue; more precisely, the revenue from monotonic mechanisms is no more than k times the simple revenue obtainable by selling the goods separately, or bundled (where k is the number of goods), whereas the maximal revenue may be arbitrarily larger. We then study the class of monotonic mechanisms and its subclass of allocation-monotonic mechanisms, and obtain useful characterizations and revenue bounds.Comment: http://www.ma.huji.ac.il/hart/publ.html#mech-mono