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The communication cost of selfishness

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  • Fadel, Ronald
  • Segal, Ilya

Abstract

We consider how many bits need to be exchanged to implement a given decision rule when the mechanism must be ex post or Bayesian incentive compatible. For ex post incentive compatibility, the communication protocol must reveal enough information to calculate monetary transfers to the agents to motivate them to be truthful (agents' payoffs are assumed to be quasilinear in such transfers). For Bayesian incentive compatibility, the protocol may need to hide some information from the agents to prevent deviations contingent on the information. In both settings with selfish agents, the communication cost can be higher than in the case in which the agents are honest and can be relied upon to report truthfully. The increase is the "communication cost of selfishness." We provide an exponential upper bound on the increase. We show that the bound is tight in the Bayesian setting, but we do not know this in the ex post setting. We describe some cases where the communication cost of selfishness proves to be very low.

Suggested Citation

  • Fadel, Ronald & Segal, Ilya, 2009. "The communication cost of selfishness," Journal of Economic Theory, Elsevier, vol. 144(5), pages 1895-1920, September.
    • Handle: RePEc:eee:jetheo:v:144:y:2009:i:5:p:1895-1920
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    Cited by:

    1. Aviad Rubinstein & Raghuvansh R. Saxena & Clayton Thomas & S. Mathew Weinberg & Junyao Zhao, 2020. "Exponential Communication Separations between Notions of Selfishness," Papers 2012.14898, arXiv.org, revised Jun 2021.
    2. Mackenzie, Andrew & Zhou, Yu, 2022. "Menu mechanisms," Journal of Economic Theory, Elsevier, vol. 204(C).
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    5. Ryuji Sano, 2021. "Dynamic communication mechanism design," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 57(1), pages 163-180, July.
    6. Grigorieva, Elena & Herings, P. Jean-Jacques & Müller, Rudolf & Vermeulen, Dries, 2011. "Inefficiency of equilibria in digital mechanisms with continuous valuations," Journal of Mathematical Economics, Elsevier, vol. 47(4-5), pages 541-544.
    7. Babaioff, Moshe & Blumrosen, Liad & Schapira, Michael, 2013. "The communication burden of payment determination," Games and Economic Behavior, Elsevier, vol. 77(1), pages 153-167.
    8. Ramesh Johari & John N. Tsitsiklis, 2009. "Efficiency of Scalar-Parameterized Mechanisms," Operations Research, INFORMS, vol. 57(4), pages 823-839, August.
    9. Kos, Nenad, 2014. "Asking questions," Games and Economic Behavior, Elsevier, vol. 87(C), pages 642-650.
    10. Kos, Nenad, 2012. "Communication and efficiency in auctions," Games and Economic Behavior, Elsevier, vol. 75(1), pages 233-249.
    11. Blumrosen, Liad & Feldman, Michal, 2013. "Mechanism design with a restricted action space," Games and Economic Behavior, Elsevier, vol. 82(C), pages 424-443.

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