Truthful mechanisms for ownership transfer with expert advice
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When a company undergoes a merger or transfer of its ownership, the existing governing body has an opinion on which buyer should take over as the new owner. Similar situations occur while assigning the host of big sports tournaments, e.g., the World Cup or the Olympics. In all these settings, the values of the external bidders are as important as the internal experts' opinions. Motivated by such questions, we consider a social welfare maximizing approach to design and analyze truthful mechanisms in these settings. We consider the problem with one expert and two bidders and provide tight approximation guarantees of the optimal social welfare. Since this problem is a combination of mechanism design with and without monetary transfers (payments can be imposed to the bidders but not to the expert), classical solutions like VCG cannot be applied, making this a unique mechanism design problem. We distinguish between mechanisms that use ordinal and cardinal information, as well as between mechanisms that base their decisions on one of the two sides (either the bidders or the expert) or both. Our analysis shows that the cardinal setting is quite rich and admits several non-trivial randomized truthful mechanisms, and also allows for closer-to-optimal-welfare guarantees.
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