Algorithmic Mechanism Design - univaq.it.pptVIP

* * * * * * * * * * * * * * * * * * * Truthful Mechanism Design: Economics Issues QUESTION: How to design a truthful mechanism? Or, in other words: How to design algorithm g, and How to define the payment scheme p in such a way that the underlying SCF is implemented truthfully? Under which conditions can this be done? Mechanism Design: Algorithmic Issues QUESTION: What is the time complexity of the mechanism? Or, in other words: What is the time complexity of computing g(r)? What is the time complexity to calculate the N payment functions? What does it happen if it is NP-hard to implement the underlying SCF? Question: What is the time complexity of the Vickrey auction? Answer: Θ(N), where N is the number of players. Indeed, it suffices to check all the offers, by keeping track of the largest one and of the second largest one. Utilitarian problems: A problem is utilitarian if its SCF is such that f(t,x) = ?i vi(ti,x), i.e., the SCF is separately-additive w.r.t. players’ valuations. Remark 1: the auction problem is utilitarian, in that f(t,x) is the type associated with the winner x, and the valuation of a player is either her type or 0, depending on whether she wins or not. Then, f(t,x) = ?i vi(ti,x). Remark 2: in many network optimization problems (which are of our special interest) the SCF is separately-additive Good news: for utilitarian problems there exists a class of truthful mechanisms ? A prominent class of problems Vickrey-Clarke-Groves (VCG) Mechanisms A VCG-mechanism is (the only) strategy-proof mechanism for utilitarian problems: Algorithm g computes: g(r) = arg maxy?X ?i vi(ri,y) Payment function for player i: pi(g(r)) = hi(r-i) + ?j≠i vj(rj,g(r)) where hi(r-i) is an arbitrary function of the types reported by players other than player i. What about non-utilitarian problems? Strategy-proof mechanisms are known only when the type is a single parameter (we will see them later on). Theorem VCG-mechanisms are truthful for utilitarian problems proo