The communication burden of payment determination

Moshe Babaioff, Liad Blumrosen*, Michael Schapira

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

5 Scopus citations

Abstract

In the presence of self-interested parties, mechanism designers typically aim to implement some social-choice function in an equilibrium. This paper studies the cost of such equilibrium requirements in terms of communication. While a certain amount of information . x needs to be communicated just for computing the outcome of a certain social-choice function, an . additional amount of communication may be required for computing the equilibrium-supporting payments (if exist).Our main result shows that the total amount of information required for this task can be greater than . x by a factor linear in the number of players . n, i.e., . n {dot operator} . x (under a common normalization assumption). This is the first known lower bound for this problem. In fact, we show that this result holds even in single-parameter domains. On the positive side, we show that certain classic economic domains, namely, single-item auctions and public-good mechanisms, only entail a small overhead.

Original languageAmerican English
Pages (from-to)153-167
Number of pages15
JournalGames and Economic Behavior
Volume77
Issue number1
DOIs
StatePublished - Jan 2013

Bibliographical note

Funding Information:
The authors are grateful to Moni Naor, Ilya Segal and two anonymous referees for valuable discussions and comments. Liad Blumrosen was supported by the Israeli Science Foundation grant number 230/10, and his work was done in part while being a post-doc researcher at Microsoft Research, Silicon Valley. Michael Schapira was supported by NSF grant 0331548 and by grants from the Israel Science Foundation and the USA–Israel Bi-national Science Foundation, and his work done in part while interning at Microsoft Research, Silicon Valley, as a graduate student at the Hebrew University of Jerusalem.

Keywords

  • Communication complexity
  • Implementation
  • Mechanism design
  • Revelation principle

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