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Cost And Complexity Of Harnessing Games With Payments

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Author Info

  • RAPHAEL EIDENBENZ

    ()
    (Computer Engineering and Networks Laboratory (TIK), ETH Zurich, Switzerland)

  • YVONNE ANNE PIGNOLET

    ()
    (IBM Research, Zurich Laboratory, Switzerland)

  • STEFAN SCHMID

    ()
    (Deutsche Telekom Laboratories/TU Berlin, Berlin, Germany)

  • ROGER WATTENHOFER

    ()
    (Computer Engineering and Networks Laboratory (TIK), ETH Zurich, Switzerland)

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    Abstract

    This article studies how a mechanism designer can influence games by promising payments to the players depending on their mutual choice of strategies. First, we investigate the cost of implementing a desirable behavior and present algorithms to compute this cost. Whereas a mechanism designer can decide efficiently whether strategy profiles can be implemented at no cost at all our complexity analysis indicates that computing an optimal implementation is generally NP-hard. Second, we introduce and analyze the concept of leverage in a game. The leverage captures the benefits that a benevolent or a malicious mechanism designer can achieve by implementing a certain strategy profile region within economic reason, i.e., by taking the implementation cost into account. Mechanism designers can often manipulate games and change the social welfare by a larger extent than the amount of money invested. Unfortunately, computing the leverage turns out to be intractable as well in the general case.

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    Bibliographic Info

    Article provided by World Scientific Publishing Co. Pte. Ltd. in its journal International Game Theory Review.

    Volume (Year): 13 (2011)
    Issue (Month): 01 ()
    Pages: 13-44

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    Handle: RePEc:wsi:igtrxx:v:13:y:2011:i:01:p:13-44

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