## Mechanism Design on Trust Networks

Citations: | 10 - 1 self |

### BibTeX

@MISC{Ghosh_mechanismdesign,

author = {Arpita Ghosh and Mohammad Mahdian and Daniel M. Reeves and David M. Pennock and Ryan Fugger},

title = {Mechanism Design on Trust Networks},

year = {}

}

### OpenURL

### Abstract

Abstract. We introduce the concept of a trust network—a decentralized payment infrastructure in which payments are routed as IOUs between trusted entities. The trust network has directed links between pairs of agents, with capacities that are related to the credit an agent is willing to extend another; payments may be routed between any two agents that are connected by a path in the network. The network structure introduces group budget constraints on the payments from a subset of agents to another on the trust network: this generalizes the notion of individually budget constrained bidders. We consider a multi-unit auction of identical items among bidders with unit demand, when the auctioneer and bidders are all nodes on a trust network. We define a generalized notion of social welfare for such budgetconstrained bidders, and show that the winner determination problem under this notion of social welfare is NP-hard; however the flow structure in a trust network can be exploited to approximate the solution with a factor of 1 − 1/e. We then present a pricing scheme that leads to an incentive compatible, individually rational mechanism with feasible payments that respect the trust network’s payment constraints and that maximizes the modified social welfare to within a factor 1 − 1/e. 1

### Citations

1407 |
Network Flows: Theory, Algorithms, and Applications
- Ahuja, Magnanti, et al.
- 1993
(Show Context)
Citation Context ...is the payment capacity of that path. The overall payment capacity for (i, j) is the amount that could be paid from i to j if each path from i to j was maxed out in sequence—that is, the maximum flow =-=[1]-=- from i to j. 4 Auctions on trust networks. We consider multi-unit auctions of k identical items among n bidders on the trust network. We label the nodes V = {0, . . . , m} so that auctioneer is node ... |

628 | A threshold of ln n for approximating set cover
- Feige
- 1998
(Show Context)
Citation Context ...n of the corresponding sets. Therefore the solution of the winner determination problem is precisely equal to the solution of the max k-coverage problem. The hardness result follows from a theorem of =-=[6]-=-, who show that the max k-coverage problem is hard to approximate within any factor better than 1 − 1/e, unless NP ⊆ T IME(n O(log log n) ). 4.2 Approximation algorithm The above theorem shows that th... |

185 | Truthful mechanisms for one-parameter agents
- Archer, Tardos
- 2001
(Show Context)
Citation Context ...ve compatible, ex-post individually rational, maximizes modified social welfare, and leads to payments that are feasible on the trust network. Proof. Incentive compability follows from the results in =-=[2]-=-; a direct proof can also be found in the full version of this paper. The main component of the proof is showing that these payments are feasible, i.e., they can be routed to the auctioneer along the ... |

167 |
Clique is hard to approximate within n 1−ɛ
- Håstad
- 1999
(Show Context)
Citation Context ...ective budget. It is clear that the solution of the winner determination problem in this instance corresponds to a maximum independent set in G. By the hardness of the maximum independent set problem =-=[8]-=-, the winner determination problem in this case is hard to approximate. 4.3 Algorithms for special cases Despite the hardness result in Theorem 1, the winner determination problem can be solved exactl... |

102 | Combinatorial information market design - HANSON |

74 | Multi-unit auctions with budget-constrained bidders
- Borgs, Chayes, et al.
- 2005
(Show Context)
Citation Context ...can be routed from S to 0 on the graph with link capacities cij; c(S) is a group budget, or combined budget, for the nodes in S. This generalizes the notion of individually budget-constrained bidders =-=[3]-=-. (However, note that our setting is a special case of combined budgets: not all values for combined budgets can be derived from maximum flow constraints on a network with link capacities.) We will re... |

74 |
Computational mechanism design: A call to arms
- Dash, Parkes, et al.
- 2003
(Show Context)
Citation Context ...ems that can be studied in the context of trust networks. For instance, we might have multiple sellers, heterogeneous goods, the auctioneer may prefer to maximize revenue instead of welfare and so on =-=[5]-=-. However, the impossibility result in [3] shows that in many of these cases achieving incentive compatibility in dominant strategies is impossible. A natural extension to consider, particularly for t... |

71 | Logarithmic market scoring rules for modular combinatorial information aggregation - HANSON |

34 | A dynamic pari-mutuel market for hedging, wagering, and information aggregation - PENNOCK |

28 |
and Eric Zitzewitz. Prediction markets
- Wolfers
(Show Context)
Citation Context ...t is honored depends on how other players—intermediate nodes in the trust network—fare in the game. Other mechanisms of interest to study in this setting include decision auctions, prediction markets =-=[13]-=- (with and without automated market makers [9–11]), and various incentive schemes for participation in the trust network itself.sThe continued growth and development of online services and protocols f... |

17 | On the placement of integration points in multi-hop wireless networks
- Qiu, Chandra, et al.
- 2004
(Show Context)
Citation Context ...ard as the max k-coverage problem. For the max k-coverage problem, there is a well-known greedy algorithm that achieves an approximation factor of 1 − 1/e. Using this algorithm, and a lemma proved in =-=[4]-=- for a different problem, we can show that the ex-post IR winner determination problem can be approximated within a factor of 1 − 1/e. The algorithm, which is a natural generalization of the greedy al... |

2 |
The ripple project. http://ripple.sourceforge.net
- Fugger
- 2004
(Show Context)
Citation Context ...oes not require, and is in fact resistant to, control by special groups. A non-hierarchical financial network can have similar advantages. Two systems recently implemented by the authors—first Ripple =-=[7]-=- and then Yootles [12]—demonstrate this powerful generalization of the usual financial trust tree. These systems route payments through arbitrary financial trust networks much like the internet routes... |