Optimal Payments in Dominant-Strategy Mechanisms for Single-Parameter Domains Victor Naroditskiy Maria Polukarov Nicholas R. Jennings School of Electronics and Computer Science, University of Southampton, United Kingdom fvn,mp3,
[email protected] Abstract We study dominant-strategy mechanisms in allocation domains where agents have one-dimensional types and quasi-linear utilities. Taking an allocation function as an input, we present an algorithmic technique for finding opti- mal payments in a class of mechanism design problems, including utilitarian and egalitarian allocation of homogeneous items with nondecreasing marginal costs. Our results link optimality of payment functions to a geometric condi- tion involving triangulations of polytopes. When this condition is satisfied, we constructively show the existence of an optimal payment function that is piecewise linear in agent types. 1. Introduction A celebrated positive result in dominant-strategy implementation is the class of Groves mechanism [10] for quasi-linear environments. For unrestricted type spaces, the Groves class describes all deterministic dominant-strategy mechanisms [21]. When types are given by single numbers|in single-parameter domains|it characterizes all efficient mechanisms. Mechanisms within the Groves class differ from one another in the amounts of payments they col- lect from the agents. Until recently, most of the attention in the literature was given to a single Groves mechanism called VCG.1 Our work develops a 1Also known as the Vickrey-Clarke-Groves, the pivotal, or the Clarke mechanism. technique for finding the best mechanism from the Groves class (and a more general class that includes non-efficient mechanisms) for a given objective. To see the need to optimize over mechanisms in the Groves class, consider allocating free items among a group of participants each having a private value for receiving an item (or, more generally, scenarios with no residual claimant absorbing the surplus or covering the deficit).