Optimal decision-making with minimal waste: strategyproof redistribution of VCG payments
AAMAS '06 Proceedings of the fifth international joint conference on Autonomous agents and multiagent systems
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We address the problem of designing efficient mechanisms that never yield revenue, instead requiring small subsidies. Such mechanisms will be pertinent for settings in which taxing agents is undesirable or impractical---imagine, e.g., a government or private philanthropist that seeks to make a minimal monetary contribution that will allow a group of individuals to reach an efficient decision without being stripped of any of the surplus. Our approach is a close analog of [1], where structure in agent valuations is used to arrive at agent-independent revenue lower bounds for the VCG mechanism that form the basis for redistributing VCG revenue back to the agents without distorting incentives; in the current paper we use valuation structure to obtain revenue upper bounds that form the basis for a second stage of redistribution, returning the revenue of the redistribution mechanism of [1] such that revenue is non-positive but still close to zero. The mechanism we propose is applicable to arbitrary decision problems, always achieving dominant strategy efficiency, ex post individual rationality, and no-revenue. In single-item allocation settings it is asymptotically strongly budget-balanced as the population size grows; we show empirically that for standard distributions over valuations it requires subsidies that are less than 5% of social value, in expectation, for groups of more than 5 agents.