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Journal Article

Multiagent mechanism design without money

Operations Research 67 (5): ii–iv, 1209–1502
Santiago R. Balseiro, Huseyin Gurkan, Peng Sun (2019)
Subject(s)
Management sciences, decision sciences and quantitative methods; Product and operations management
Keyword(s)
Dynamic mechanism design, social efficiency, multi-agent games, resource allocation without money
We consider a principal repeatedly allocating a single resource in each period to one of multiple agents, whose values are private, without relying on monetary payments over an infinite horizon with discounting. We design a dynamic mechanism without monetary transfers, which induces agents to report their values truthfully in each period via promises/threats of future favorable/unfavorable allocations. We show that our mechanism asymptotically achieves the first-best efficient allocation (the welfare-maximizing allocation as if values are public) as agents become more patient and provide sharp characterizations of convergence rates to first best as a function of the discount factor. In particular, in the case of two agents we prove that the convergence rate of our mechanism is optimal, i.e., no other mechanism can converge faster to first best.
Copyright © 2019, INFORMS
Volume
67
Journal Pages
ii–iv, 1209–1502