Beyond VCG: Frugality of Truthful Mechanisms

We study truthful mechanisms for auctions in which the auctioneer is trying to hire a team of agents to perform a complex task, and paying them for their work. As common in the field of mechanism design, we assume that the agents are selfish and will act in such a way as to maximize their profit, which in particular may include misrepresenting their true incurred cost. Our first contribution is a new and natural definition of the frugality ratio of a mechanism, measuring the amount by which a mechanism “overpays”, and extending previous definitions to all monopoly-free set systems. After reexamining several known results in light of this new definition, we proceed to study in detail shortest path auctions and “r-out-of-k sets” auctions. We show that when individual set systems (e.g., graphs) are considered instead of worst cases over all instances, these problems exhibit a rich structure, and the performance of mechanisms may be vastly different. In particular, we show ...

• Type: Conference
• Year: 2005
• Where: FOCS
• Authors: Anna R. Karlin, David Kempe, Tami Tamir
• Keywords: FOCS 2005, Mechanism Design, Set Systems, Theoretical Computer Science, True Incurred Cost