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20
Algorithmic mechanism design
 Games and Economic Behavior
, 1999
"... We consider algorithmic problems in a distributed setting where the participants cannot be assumed to follow the algorithm but rather their own selfinterest. As such participants, termed agents, are capable of manipulating the algorithm, the algorithm designer should ensure in advance that the agen ..."
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Cited by 577 (20 self)
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We consider algorithmic problems in a distributed setting where the participants cannot be assumed to follow the algorithm but rather their own selfinterest. As such participants, termed agents, are capable of manipulating the algorithm, the algorithm designer should ensure in advance that the agents ’ interests are best served by behaving correctly. Following notions from the field of mechanism design, we suggest a framework for studying such algorithms. Our main technical contribution concerns the study of a representative task scheduling problem for which the standard mechanism design tools do not suffice. Journal of Economic Literature
Computationally feasible VCG mechanisms
 In Proceedings of the Second ACM Conference on Electronic Commerce (EC’00
, 2000
"... A major achievement of mechanism design theory is a general method for the construction of truthful mechanisms called VCG. When applying this method to complex problems such as combinatorial auctions, a difficulty arises: VCG mechanisms are required to compute optimal outcomes and are therefore comp ..."
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Cited by 192 (5 self)
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A major achievement of mechanism design theory is a general method for the construction of truthful mechanisms called VCG. When applying this method to complex problems such as combinatorial auctions, a difficulty arises: VCG mechanisms are required to compute optimal outcomes and are therefore computationally infeasible. However, if the optimal outcome is replaced by the results of a suboptimal algorithm, the resulting mechanism (termed VCGbased) is no longer necessarily truthful. The first part of this paper studies this phenomenon in depth and shows that it is near universal. Specifically, we prove that essentially all reasonable approximations or heuristics for combinatorial auctions as well as a wide class of cost minimization problems yield nontruthful VCGbased mechanisms. We generalize these results for affine maximizers. The second part of this paper proposes a general method for circumventing the above problem. We introduce a modification of VCGbased mechanisms in which the agents are given a chance to improve the output of the underlying algorithm. When the agents behave truthfully, the welfare obtained by the mechanism is at least as good as the one obtained by the algorithm’s output. We provide a strong rationale for truthtelling behavior. Our method satisfies individual rationality as well.
Limitations of VCGbased mechanisms
 In Proceedings of the 39th annual ACM symposium on Theory of computing
, 2007
"... We consider computationallyefficient incentivecompatible mechanisms that use the VCG payment scheme, and study how well they can approximate the social welfare in auction settings. We present a novel technique for setting lower bounds on the approximation ratio of this type of mechanisms. Specific ..."
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Cited by 20 (2 self)
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We consider computationallyefficient incentivecompatible mechanisms that use the VCG payment scheme, and study how well they can approximate the social welfare in auction settings. We present a novel technique for setting lower bounds on the approximation ratio of this type of mechanisms. Specifically, for combinatorial auctions among submodular (and thus also subadditive) bidders we prove an Ω(m 1 6) lower bound, which is close to the known upper bound of O(m 1 2), and qualitatively higher than the constant factor approximation possible from a purely computational point of view.
On the expected payment of mechanisms for task allocation
 In PODC
, 2004
"... We study a generic task allocation problem called shortest paths: Let G be a directed graph in which the edges are owned by self interested agents. Each edge has an associated cost that is privately known to its owner. Let s and t be two distinguished nodes in G. Given a distribution on the edge cos ..."
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Cited by 18 (1 self)
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We study a generic task allocation problem called shortest paths: Let G be a directed graph in which the edges are owned by self interested agents. Each edge has an associated cost that is privately known to its owner. Let s and t be two distinguished nodes in G. Given a distribution on the edge costs, the goal is to design a mechanism (protocol) which acquires a cheap st path. We first prove that the class of generalized VCG mechanisms has certain monotonicity properties. We exploit this observation to obtain, under an independence assumption, expected payments which are significantly better than the worst case bounds of [4, 7]. We then investigate whether these payments can be improved when there is a competition among paths. Surprisingly, we give evidence to the fact that typically such competition hardly helps incentive compatible mechanisms. In particular, we show this for the celebrated VCG mechanism. We then construct a novel general protocol combining the advantages of incentive compatible and nonincentive compatible mechanisms. Under reasonable assumptions on the agents we show that the overpayment of our mechanism is very small. Finally, we demonstrate that many task allocation problems can be reduced to shortest paths. 1
Algorithms for Rational Agents
 In Proc. of the 27th Annual Conference on Current Trends in Theory and Practice of Informatics
, 2000
"... Many recent applications of interest involve selfinterested participants. As such participants, termed agents, may manipulate the algorithm for their own benefit, a new challenge emerges: The design of algorithms and protocols that perform well when the agents behave according to their own selfint ..."
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Cited by 16 (3 self)
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Many recent applications of interest involve selfinterested participants. As such participants, termed agents, may manipulate the algorithm for their own benefit, a new challenge emerges: The design of algorithms and protocols that perform well when the agents behave according to their own selfinterest. This led several researchers to consider computational models that are based on a subfield of gametheory and microeconomics called mechanism design. This paper introduces this topic mainly through examples. It demonstrates that in many cases selfishness can be satisfactorily overcome, surveys some of the recent trends in this area and presents new challenging problems. The paper is mostly based on classic results from mechanism design as well as on recent work by the author and others.
Mechanism design with incomplete languages
 PROC. 3RD ACM CONF. ON ELECTRONIC COMMERCE (EC’01)
, 2001
"... A major achievement of mechanism design theory is the family of truthful mechanisms often called VCG (named after Vickrey, Clarke and Groves). Although these mechanisms have many appealing properties, their essential intractability prevents them from being applied to complex problems like combinator ..."
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Cited by 9 (0 self)
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A major achievement of mechanism design theory is the family of truthful mechanisms often called VCG (named after Vickrey, Clarke and Groves). Although these mechanisms have many appealing properties, their essential intractability prevents them from being applied to complex problems like combinatorial auctions. In particular, VCG mechanisms require the agents to fully describe their valuation functions to the mechanism. Such a description may require exponential size and thus be infeasible for the agents. A natural approach for this problem is to introduce an intermediate language for the description of the valuations. Such a language must be succinct to both the agents and the mechanism. Unfortunately, the resulting mechanisms are neither truthful nor do they satisfy individual rationality. This paper suggests a general method for overcoming this difficulty. Given an intermediate language and an algorithm for computing the results, we propose three different mechanisms, each more powerful than its predecessor, but also more time consuming. Under reasonable assumptions, the results of our mechanisms are at least as good as the results of the algorithm on the actual valuations. All of our mechanisms have polynomial computational time and satisfy individual rationality.
AN IMPROVED RANDOMIZED TRUTHFUL MECHANISM FOR SCHEDULING UNRELATED MACHINES
, 2008
"... We study the scheduling problem on unrelated machines in the mechanism design setting. This problem was proposed and studied in the seminal paper of Nisan and Ronen [NR99], where they gave a 1.75approximation randomized truthful mechanism for the case of two machines. We improve this result by a 1 ..."
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Cited by 8 (1 self)
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We study the scheduling problem on unrelated machines in the mechanism design setting. This problem was proposed and studied in the seminal paper of Nisan and Ronen [NR99], where they gave a 1.75approximation randomized truthful mechanism for the case of two machines. We improve this result by a 1.6737approximation randomized truthful mechanism. We also generalize our result to a 0.8368mapproximation mechanism for task scheduling with m machines, which improve the previous best upper bound of 0.875m [MS07].
Information and communication in mechanism design
, 2006
"... September 2006This work was carried out under the supervision of ..."
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Cited by 2 (0 self)
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September 2006This work was carried out under the supervision of
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"... Abstract One of the major achievements of mechanism design theory is the family of truthful (incentive compatible) mechanisms often called VCG (named after Vickrey, Clarke and Groves). When applying VCG mechanisms to complex mechanism design problems such as combinatorial auctions a problem emerges: ..."
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Abstract One of the major achievements of mechanism design theory is the family of truthful (incentive compatible) mechanisms often called VCG (named after Vickrey, Clarke and Groves). When applying VCG mechanisms to complex mechanism design problems such as combinatorial auctions a problem emerges: even finding optimal outcomes is computationally intractable. A striking observation is that if the optimal outcome is replaced by the results of computationally tractable approximation algorithms or heuristics then the resulting mechanism (termed VCGbased) is no longer necessarily truthful! The first part of this paper considers this problem in depth and shows that it is almost universal. Specifically, we prove that essentially all reasonable approximations or heuristics for combinatorial auctions as well as a wide class of cost minimization problems yield nontruthful VCGbased mechanisms. The second part of this paper proposes a method for handling this nontruthfulness. We introduce a notion of feasible truthfulness that captures the limitation on agents imposed by their own computational limits. We then show that under reasonable assumptions on the agents, it is possible to turn any VCGbased mechanism into a feasibly truthful one, using an additional appeal mechanism. The resulting mechanism also satisfies participation constraints.