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  • Geoffroy de Clippel
  • Louis Putterman
  • Victor Naroditskiy
  • Maria Polukarov
  • Amy Greenwald
  • Nicholas R. Jennings

Abstract

We study the problem of allocating m identical items among n > m agents with unit demand and private value for consuming the good. We allow payments and focus on dominant{strategy implementation. In the absence of an auctioneer who can absorb payments collected from the agents, the payments must be burnt to support dominant{strategy implementation. Recent work modified the classic VCG mechanism by redistributing as much of the payments as possible back to the agents while still satisfying incentive constraints. This approach guarantees allocative efficiency, but in some cases a large percentage of social welfare is lost. In this paper, we provide a mechanism that is not allocatively efficient but is instead guaranteed to achieve at least 80% of the social welfare as n ! 1. Moreover, in the extreme case of m = n ?? 1 where VCG{based mechanisms provide zero welfare, the percentage of social welfare maintained by our mechanism asymptotically approaches 100%.

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Bibliographic Info

Paper provided by Brown University, Department of Economics in its series Working Papers with number 2012-9.

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Date of creation: 2012
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Handle: RePEc:bro:econwp:2012-9

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Postal: Department of Economics, Brown University, Providence, RI 02912

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References

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  1. Porter, Ryan & Shoham, Yoav & Tennenholtz, Moshe, 2004. "Fair imposition," Journal of Economic Theory, Elsevier, vol. 118(2), pages 209-228, October.
  2. Guo, Mingyu & Conitzer, Vincent, 2009. "Worst-case optimal redistribution of VCG payments in multi-unit auctions," Games and Economic Behavior, Elsevier, vol. 67(1), pages 69-98, September.
  3. Moulin, Hervé, 2009. "Almost budget-balanced VCG mechanisms to assign multiple objects," Journal of Economic Theory, Elsevier, vol. 144(1), pages 96-119, January.
  4. Bailey, Martin J, 1997. " The Demand Revealing Process: To Distribute the Surplus," Public Choice, Springer, vol. 91(2), pages 107-26, April.
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Cited by:
  1. SPRUMONT, Yves, 2011. "Constrained-optimal strategy-proof assignment: beyond the Groves mechanisms," Cahiers de recherche 2011-09, Universite de Montreal, Departement de sciences economiques.

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