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103
Distributed Algorithmic Mechanism Design: Recent Results and Future Directions
 In Proceedings of the 6th International Workshop on Discrete Algorithms and Methods for Mobile Computing and Communications
, 2002
"... Distributed Algorithmic Mechanism Design (DAMD) combines theoretical computer science's traditional focus on computational tractability with its more recent interest in incentive compatibility and distributed computing. The Internet's decentralized nature, in which distributed computation and autono ..."
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Cited by 239 (17 self)
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Distributed Algorithmic Mechanism Design (DAMD) combines theoretical computer science's traditional focus on computational tractability with its more recent interest in incentive compatibility and distributed computing. The Internet's decentralized nature, in which distributed computation and autonomous agents prevail, makes DAMD a very natural approach for many Internet problems. This paper first outlines the basics of DAMD and then reviews previous DAMD results on multicast cost sharing and interdomain routing. The remainder of the paper describes several promising research directions and poses some specific open problems.
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 188 (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.
Achieving BudgetBalance with VickreyBased Payment Schemes in Exchanges
 In Proceedings of the 17th International Joint Conference on Artificial Intelligence
, 2001
"... Generalized Vickrey mechanisms have received wide attention in the literature because they are efficient and strategyproof, i.e. truthful bidding is optimal whatever the bids of other agents. However it is wellknown that it is impossible for an exchange, with multiple buyers and sellers, to be ..."
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Cited by 98 (18 self)
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Generalized Vickrey mechanisms have received wide attention in the literature because they are efficient and strategyproof, i.e. truthful bidding is optimal whatever the bids of other agents. However it is wellknown that it is impossible for an exchange, with multiple buyers and sellers, to be efficient and budgetbalanced, even putting strategyproofness to one side. A marketmaker in an efficient exchange must make more payments than it collects. We enforce budgetbalance as a hard constraint, and explore payment rules to distribute surplus after an exchange clears to minimize distance to Vickrey payments. Different rules lead to different levels of truthrevelation and efficiency. Experimental and theoretical analysis suggest a simple Threshold scheme, which gives surplus to agents with payments further than a certain threshold value from their Vickrey payments. The scheme appears able to exploit agent uncertainty about bids from other agents to reduce manipulation and boost allocative efficiency in comparison with other simple rules.
Eliciting Informative Feedback: The PeerPrediction Method
 Management Science
, 2005
"... informs ® doi 10.1287/mnsc.1050.0379 ..."
Robust mechanism design
 ECONOMETRICA
, 2005
"... The mechanism design literature assumes too much common knowledge of the environment among the players and planner. We relax this assumption by studying implementation on richer type spaces, with more higher order uncertainty. We study the "ex post equivalence" question: when is interim implementati ..."
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Cited by 55 (6 self)
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The mechanism design literature assumes too much common knowledge of the environment among the players and planner. We relax this assumption by studying implementation on richer type spaces, with more higher order uncertainty. We study the "ex post equivalence" question: when is interim implementation on all possible type spaces equivalent to requiring ex post implementation on the space of payoff types? We show that ex post equivalence holds when the social choice correspondence is a function and in simple quasilinear environments. When ex post equivalence holds, we identify how large the type space must be to obtain the equivalence. We also show that ex post equivalence fails in general, including in quasilinear environments with budget balance. For quasilinear environments, we provide an exact characterization of when interim implementation is possible in rich type spaces. In this environment, the planner can fully extract players’ belief types, so the incentive constraints reduce to conditions distinguishing types with the same beliefs about others’ types but different payoff types.
Optimal Collusion with Private Information
 RAND Journal of Economics
, 2001
"... pp. 428–465 We analyze collusion in an infinitely repeated Bertrand game, where prices are publicly observed and each firm receives a privately observed, i.i.d. cost shock in each period. Productive efficiency is possible only if highcost firms relinquish market share. In the most profitable collus ..."
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Cited by 52 (6 self)
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pp. 428–465 We analyze collusion in an infinitely repeated Bertrand game, where prices are publicly observed and each firm receives a privately observed, i.i.d. cost shock in each period. Productive efficiency is possible only if highcost firms relinquish market share. In the most profitable collusive schemes, firms implement productive efficiency, and highcost firms are favored with higher expected market share in future periods. If types are discrete, there exists a discount factor strictly less than one above which firstbest profits can be attained using historydependent reallocation of market share between equally efficient firms. We also analyze the role of communication and sidepayments. 1.
Mdpop: Faithful distributed implementation of efficient social choice problems
 In AAMAS’06  Autonomous Agents and Multiagent Systems
, 2006
"... In the efficient social choice problem, the goal is to assign values, subject to side constraints, to a set of variables to maximize the total utility across a population of agents, where each agent has private information about its utility function. In this paper we model the social choice problem ..."
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Cited by 41 (15 self)
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In the efficient social choice problem, the goal is to assign values, subject to side constraints, to a set of variables to maximize the total utility across a population of agents, where each agent has private information about its utility function. In this paper we model the social choice problem as a distributed constraint optimization problem (DCOP), in which each agent can communicate with other agents that share an interest in one or more variables. Whereas existing DCOP algorithms can be easily manipulated by an agent, either by misreporting private information or deviating from the algorithm, we introduce MDPOP, the first DCOP algorithm that provides a faithful distributed implementation for efficient social choice. This provides a concrete example of how the methods of mechanism design can be unified with those of distributed optimization. Faithfulness ensures that no agent can benefit by unilaterally deviating from any aspect of the protocol, neither informationrevelation, computation, nor communication, and whatever the private information of other agents. We allow for payments by agents to a central bank, which is the only central authority that we require. To achieve faithfulness, we carefully integrate the VickreyClarkeGroves (VCG) mechanism with the DPOP algorithm, such that each agent is only asked to perform computation, report
Mechanism Design with Interdependent Valuations
 E¢ ciency,” Econometrica
, 2004
"... Agents ’ valuations are interdependent if they depend on the signals, or types, of all agents. Under the implicit assumption that agents cannot observe their outcomedecision payoffs, previous literature has shown that with interdependent valuations and independent signals efficient design is imposs ..."
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Cited by 36 (4 self)
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Agents ’ valuations are interdependent if they depend on the signals, or types, of all agents. Under the implicit assumption that agents cannot observe their outcomedecision payoffs, previous literature has shown that with interdependent valuations and independent signals efficient design is impossible. This paper shows that an efficient mechanism exists in an environment where first the final outcome (e.g., allocation of the goods) is determined, then the agents observe their own outcomedecision payoffs, and then final transfers are made.