Optimal mechanism design and money burning

  title={Optimal mechanism design and money burning},
  author={Jason D. Hartline and Tim Roughgarden},
  journal={Proceedings of the fortieth annual ACM symposium on Theory of computing},
Mechanism design is now a standard tool in computer science for aligning the incentives of self-interested agents with the objectives of a system designer. There is, however, a fundamental disconnect between the traditional application domains of mechanism design (such as auctions) and those arising in computer science (such as networks): while monetary "transfers" (i.e., payments) are essential for most of the known positive results in mechanism design, they are undesirable or even… 

Figures from this paper

Mechanism Design and Approximation
Our world is an interconnected collection of economic and computational systems. Within such a system, individuals optimize their actions to achieve their own, perhaps selfish, goals; and the system
Incentive-Centered Design of Money-Free Mechanisms
This thesis serves as a step toward a better understanding of how to design fair and efficient multiagent resource allocation systems by bringing the incentives of the participating agents to the
We consider two classes of optimization problems that emerge in the set up of the reverse auctions (a.k.a. procurement auctions). Unlike the standard optimization taking place for a commonly known
Preliminary Examination II VCG Redistribution Mechanisms
Mechanism design, originally a subfield of microeconomics that concerns implementing systemic good solutions to problems that involve multiple self-interested agents so as to align their incentives
Algorithmic Mechanisms for Reliable Internet-based Computing under Collusion
Using a game-theoretic approach, cost-sensitive mechanisms that lead to reliable Internet-based computing are designed, where a master processor assigns, across the Internet, a computational task to a set of potentially untrusted worker processors and collects their responses.
Efficient Money Burning in General Domains
Two essentially orthogonal randomized truthful mechanisms are presented that extract an \(O(\log m)\) fraction of the maximum welfare as social utility and achieves a \(O(1))-approximation for the social welfare, which is improved to an O(1)-app approximation by the second mechanism.
Algorithmic Mechanism Design in Dynamic Environments
This thesis explores the interplay of incentives and the dynamic nature of decision-making in the design of efficient mechanisms by introducing a novel class of dynamic auction problems in which a monopolist is selling items in consecutive stages to buyers.
Systems-compatible incentives
Using findings from recent work on incentive-compatible systems, this paper discusses several economic mechanisms and assumptions: money, punishment, and altruism, and seeks to understand when these mechanisms violate system properties.
Sequential Posted Pricing and Multi-parameter Mechanism Design
A theory of sequential posted price mechanisms, where agents in sequence are offered take-it-or-leave-it prices, which generalize naturally to give the first known approximations to the elusive optimal multi-dimensional mechanism design problem.
Incentive compatible two-tiered resource allocation without money
This work examines whether there exist allocation rules yielding expected welfare that--in ex post equilibrium--exceeds that of a baseline that randomly assigns the scarce resource, and finds the answer is yes only in cases where the value distribution does not have a monotonically increasing hazard rate.


On profit maximization in mechanism design
A mechanism is developed that approximates the optimal profit to within a constant factor, when the set system is a matroid, so that procurement problems over non-matroid set systems are not likely to be solved with current techniques.
Beyond VCG: frugality of truthful mechanisms
A new and natural definition of the frugality ratio of a mechanism is measured, measuring the amount by which a mechanism "overpays", and extending previous definitions to all monopoly-free set systems.
Worst-case optimal redistribution of VCG payments
A family of mechanisms that redistribute some of the VCG payment back to the agents are proposed, and all mechanisms in the family are efficient, strategy-proof, individually rational, and never incur a deficit.
Distributed algorithmic mechanism design
This dissertation studies two problems, multicast cost sharing and interdomain routing, and proves fundamental lower bounds on the network complexity of group-strategyproof mechanisms that are exactly or approximately budget-balanced.
Frugality in path auctions
This work investigates the payments the buyer must make in order to buy a path, and identifies the optimal mechanism with regard to total payment, which gives a lower bound on all mechanisms with Bayes--Nash equilibria.
An approximate truthful mechanism for combinatorial auctions with single parameter agents
This work devise a version of randomized rounding that is incentive compatible, giving a truthful mechanism for combinatorial auctions with single parameter agents (e.g., "single minded bidders") that approximately maximizes the social value of the auction.
Manna from Heaven or Forty Years in the Desert: Optimal Allocation Without Transfer Payments
Often an organization, government or entity must allocate goods without collecting payment in return. This may pose a difficult problem when agents receiving those goods have private information in
The Price of Truth: Frugality in Truthful Mechanisms
This work quantifies the notion of overpayment, and shows that the class of instances for which VCG never overpays is a natural generalization of matroids, that the authors call frugoids.
Algorithmic Game Theory: Mechanism Design without Money
Despite impossibility results on general domains, there are some classes of situations in which there exist interesting dominant-strategy mechanisms. While some of these situations (and the resulting
Competitive auctions