Welfare and Fairness in Dominant-Strategy Mechanisms

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• Victor Naroditskiy (University of Southampton)
• Tuesday 04 February 2014, 14:00-15:00
• MR15, Centre for Mathematical Sciences, Wilberforce Road, Cambridge.

If you have a question about this talk, please contact Felix Fischer.

I study allocation of resources among participants with private valuations. Payments are commonly used to make truthful reporting a dominant strategy. I focus on allocation scenarios without an auctioneer who is benefiting from the collected payments. I ask the question of finding the best mechanism according to a utilitarian or egalitarian objective. For the class of efficient mechanisms, the question boils down to choosing the best payment function, which pins down a mechanism from the Groves class. I obtain general characterisation results along with an approach for choosing the best Groves mechanism. The characterisation links optimality of the mechanism’s payment function to a geometric condition involving triangulations of hypercubes. I then derive optimal payment functions for several fundamental resource allocation scenarios. In the context of allocating identical items, I design a non-efficient mechanism that achieves much better welfare guarantees than the best efficient mechanism. This illustrates an unintuitive result that “destroying” some of the resources may increase welfare.

This talk is part of the Optimization and Incentives Seminar series.

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