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Optimal Privacy-Constrained Mechanisms

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Work introduces a Bayesian privacy-loss metric measured by KL divergence (equivalently mutual information) and enforces an exogenous privacy budget kappa on mechanisms; solves a seller’s screening problem with one buyer under quadratic costs. Optimal mechanisms use an interval partition of types (privacy constraint binds; very tight privacy reduces to two intervals), the number of intervals jumps discretely as kappa relaxes (visible kinks in profit), full privacy yields posted-price buyer surplus maximization, no privacy maximizes total welfare.

AI-written summary · about

  1. 0:00Intro
  2. 1:06Differential Privacy
  3. 1:38What if
  4. 2:47General Mechanism
  5. 3:43Privacy Laws
  6. 4:04Exercise
  7. 4:44Discussion
  8. 10:02Application
  9. 13:27Mean result
  10. 13:53Properties
  11. 23:15Consumer Surplus Total Welfare
  12. 23:59Summary
  13. 24:56Conclusion
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