Algorithmic Mechanism Design
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Algorithmic Mechanism Design Noam Nisan Institute of Computer Science Hebrew University of Jerusalem Givat Ram Israel and Scho ol of Computer Science IDC Herzliya Emailnoamcshujiacil y Amir Ronen Institute of Computer Science Hebrew University of Jerusalem Givat Ram Israel Emailamirycshujiacil This researchwas supp orted by grants from the Israeli ministry of Science and the Israeli academy of sciences y This researchwas supp orted by grants from the Israeli ministry of Science and the Israeli academy of sciences Algorithmic Mechanism Design contact Amir Ronen Institute of Computer Science Hebrew University of Jerusalem Givat Ram Israel Emailamirycshujiacil Abstract We consider algorithmic problems in a distributed setting where the participants cannot b e assumed to follow the algorithm but rather their own selfinterest As such participants termed agents are capable of manipulating the algorithm the algorithm designer should ensure in advance that the agents interests are b est served by b ehaving correctly Following notions from the eld of mechanism design we suggest a framework for studying such algorithms In this mo del the algorithmic solution is adorned with payments to the partic ipants and is termed a mechanism The payments should b e carefully chosen as to motivate all participants to act as the algorithm designer wishes We apply the standard to ols of mechanism design to algorithmic problems and in particular to the shortest path problem Our main technical contribution concerns the study of a representative problem task schedul ing for which the standard to ols do not suce We present several theorems regarding this problem including an approximation mechanism lower b ounds and a randomized mechanism We also suggest and motivate extensions to the basic mo del and prove improved upp er b ounds in the extended mo del Many op en problems are suggested as well Journal of Economic Literature classication numb ers C C D D D Intro duction Motivation A large part of research in computer science is concerned with proto cols and algorithms for inter connected collections of computers The designer of such an algorithm or proto col always makes an implicit assumption that the participating computers will act as instructed except p erhaps for the faulty or malicious ones With the emergence of the Internet as the platform of computation this assumption can no longer b e taken for granted Computers on the Internet b elong to dierent p ersons or organizations and will likely do what is most b enecial to their owners We cannot simply exp ect each computer on the Internet to faithfully follow the designed proto cols or algorithms It is more reasonable to exp ect that each computer will try to manipulate it for its owners b enet Such an algorithm or proto col must therefore b e designed in advance for this kind of b ehavior Let us sketchtwo example applications wehave in mind Load balancing The aggregate p ower of all computers on the Internet is huge In a dream world this aggregate power will b e optimally allo cated online among all connected pro cessors One could imagine CPU intensive jobs automatically migrating to CPUservers caching automatically done by computers with free disk space etc Access to data communication lines and even physical attachments suchasprinters could all b e allo cated across the Internet This is clearly a dicult optimization problem even within tightly linked systems and is addressed in various forms and with varying degrees of success by all distributed op erating systems The same typeofallocationover the Internet requires handling an additional problem the resources b elong to dierent parties who may not allow others to freely use them The algorithms and proto cols maythus need to provide some motivation for these o wners to play along Routing When one computer wishes to send information to another the data usually gets routed through various intermediate routers So far this has b een done voluntarily probably due to the low marginal cost of forwarding a packet However when communication of larger amounts of data b ecomes common eg video and bandwidth needs to b e reserved under various quality of service QoS proto cols this altruistic b ehavior of the routers may no longer hold If so we will haveto design proto cols sp ecically taking the routers selfinterest into account This Work In this pap er we prop ose a formal mo del for studying algorithms that assume that the participants all act according to their own selfinterest We adopt a rationalitybased approach using notions from game theory and microeconomics and in particular from the eld of mechanism design We assume that each participant has a well dened utility function that represents its preference over the p ossible outputs of the algorithm and we assume that participants act as to rationally optimize their utilityWe term such rational and selsh participants agents The solutions we consider contain b oth an algorithmic ingredient obtaining the intended results and a payment ingredient that motivates the agents Wetermsuch a solution a mechanism Our contributions in this work are as follows We present a formal mo del for studying optimization problems The mo del is based on the eld of mechanism design A problem in this mo del has in addition to the output sp ecication a description of the agents utilities The mechanism has in addition to the algorithm pro ducing the desired output payments to the participating agents An exp osition of applying several classic notions from mechanism design in our mo del app ears in Nisan We observe that the known techniques from mechanism design provide solutions for several basic optimization problems and in particular for the shortest path problem where each edge may b elong to a dierent agent e the We study a basic problem task scheduling which requires new techniques and prov following We design an napproximation mechanism where n is the number of agents We provealower b ound of to the approximation ratio that can b e achieved byany mechanism This b ound is tight for the case of twoagents but leaves a gap for more agents We conjecture that the upp er b ound is tight in general and prove it for two restricted classes of mechanisms This notion from microeconomics is often used in mechanism design The term is taken from the distributed AI community whichhaveintro duced the usage of mechanism design in a computational setting Weuseithowever in a much more restricted and welldened sense This is the standard term used in mechanism design We are not the rst to use notions from mechanism design in a computational setting See section We design a randomized mechanism that b eats the deterministic lower b ound We extend the basic mo del formalizing a mo del where the mechanism has more information We call this mo del a mechanism with verication and argue that it is justied in certain applications We study the task scheduling problem in the extended mo del and obtain two main results An optimal mechanism with verication for task scheduling that requires exp onential computation time A p olynomial time approximation mechanism with verication for a subcase of the problem A preliminary version of this pap er app eared at the thirtyrst annual symp osium on theory of computing Nisan and Ronen ExtantWork There have b een manyworks that tried to intro duce economic or gametheoretic asp ects into computational questions See eg Lamp ort Shostak and Pease Ferguson Nikolaou and Yemini Hub erman and Hogg Papadimitriou and Yannakakis Papadimitriou and Yannakakis and a survey by Lineal Most of these were not aimed at the problem of the co op eration of selsh entities and those that were Monderer and Tennenholtz Papadimitriou Korilis Lazar and Orda and Sandholm did not pursue our direction Many subelds of game theory and economics are also related to our work see eg MasCollel Whinston and Green chapters and We list b elow the researchwork that is most relevant to our direction Mechanism Design The eld of mechanism design also known as implementation theory aims to study how pri vately known preferences of many p eople can b e aggregated towards a so cial choice The main motivation of this eld is microeconomic and the to ols are gametheoretic Emphasis is put on the implementation of various typ es of auctions In the last few years this eld has received much interest esp ecially due to its inuence on large privatizations and sp ectrum allo cations McMillan An intro duction to this eld can b e found in MasCollel Whinston and Green chap ter Osb orne and Rubistein chapter and an inuential web site in httpwwwmarket designcom Distributed AI In the last decade or so researchers in AI have studied co op eration and comp etition among soft ware agents The meaning of agents here is very broad incorp orating attributes of co demobility articialintelli gence usercustomization and selfinterest A subeld of this general direction of research takes a game theoretic analysis of agents goals and in particular uses notions from mech anism design Rosenschein and Zlotkin Sandholm Ephrati and Rosenschein and Shoham and Tanaka A related subeld of Distributed AI sometimes termed market based computation Walsh Wellman Wurman and MacKieMason Ferguson Nikolaou and Yemini and Walsh and Wellman aims to leverage the notions of free markets in order to solve distributed problems These subelds of DAI are related to our work Communication Networks In recentyears researchers in the eld of network design