Bilateral Trade: A Regret Minimization Perspective
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Bilateral trade, a fundamental topic in economics, models the problem of intermediating between two strategic agents, a seller and a buyer, willing to trade a good for which they hold private valuations. In this paper, we cast the bilateral trade problem in a regret minimization framework over T rounds of seller/buyer interactions, with no prior knowledge on their private valuations. Our main contribution is a complete characterization of the regret regimes for fixed-price mechanisms with different feedback models and private valuations, using as a benchmark the best fixed-price in hindsight. More precisely, we prove the following tight bounds on the regret: - Θ(√(T)) for full-feedback (i.e., direct revelation mechanisms). - Θ(T^2/3) for realistic feedback (i.e., posted-price mechanisms) and independent seller/buyer valuations with bounded densities. - Θ(T) for realistic feedback and seller/buyer valuations with bounded densities. - Θ(T) for realistic feedback and independent seller/buyer valuations. - Θ(T) for the adversarial setting.
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