Strategyproof Sharing of Submodular Costs: Budget Balance Versus Efficiency
Title | Strategyproof Sharing of Submodular Costs: Budget Balance Versus Efficiency |
Publication Type | Journal Article |
Year of Publication | 2001 |
Authors | Moulin, H., & Shenker S. J. |
Published in | Economic Theory |
Volume | 18 |
Issue | 3 |
Page(s) | 511-533 |
Other Numbers | 3509 |
Abstract | A service is produced for a set of agents. The service is binary, each agent either receives service or not, and the total cost of service is a submodular function of the set receiving service. We investigate strategyproof mechanisms that elicit individual willingness to pay, decide who is served, and then share the cost among them. If such a mechanism is budget balanced (covers cost exactly), it cannot be efficient (serve the surplus maximizing set of users) and vice-versa. We characterize the rich family of budget balanced and group strategyproof mechanisms and find that the mechanism associated with the Shapley value cost sharing formula is characterized by the property that its worst welfare loss is minimal. When we require efficiency rather than budget balance the more common route in the literature we find that there is a single Clarke-Groves mechanism that satisfies certain reasonable conditions: we call this the marginal cost pricing mechanism. We compare the size of the marginal cost pricing mechanism's worst budget surplus with the worst welfare loss of the Shapley value mechanism. |
Bibliographic Notes | Economic Theory, Vol. 18, Issue 3, pp. 511-533 |
Abbreviated Authors | H. Moulin and S. Shenker |
ICSI Research Group | Networking and Security |
ICSI Publication Type | Article in journal or magazine |