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Almost budget balanced mechanisms with scalar bids for allocation of a divisible good

Thirumulanathan, D and Vinay, H and Bhashyam, Srikrishna and Sundaresan, Rajesh (2017) Almost budget balanced mechanisms with scalar bids for allocation of a divisible good. In: EUROPEAN JOURNAL OF OPERATIONAL RESEARCH, 262 (3). pp. 1196-1207.

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Official URL: http://dx.doi.org/10.1016/j.ejor.2017.04.031

Abstract

This paper is about allocation of an infinitely divisible good to several rational and strategic agents. The allocation is done by a social planner who has limited information because the agents' valuation functions are taken to be private information known only to the respective agents. We allow only a scalar signal, called a bid, from each agent to the social planner. Yang and Hajek Yang, S., Hajek, B., 2007. ``VCG-Kelly mechanisms for allocation of divisible goods: Adapting VCG mechanisms to one-dimensional signals'', IEEE Journal on Selected Areas in Communications 25 (6), 1237-1243.] and Johari and Tsitsiklis Johari, R., Tsitsiklis, J. N., 2009. ``Efficiency of scalar-parameterized mechanisms'', Operations Research 57 (4), 823-839.] proposed a scalar strategy Vickrey-Clarke-Groves (SSVCG) mechanism with efficient Nash equilibria. We consider a setting where the social planner desires minimal budget surplus. Example situations include fair sharing of Internet resources and auctioning of certain public goods where revenue maximization is not a consideration. Under the SSVCG framework, we propose a mechanism that is efficient and comes close to budget balance by returning much of the payments back to the agents in the form of rebates. We identify a design criterion for almost budget balance, impose feasibility and voluntary participation constraints, simplify the constraints, and arrive at a convex optimization problem to identify the parameters of the rebate functions. The convex optimization problem has a linear objective function and a continuum of linear constraints. We propose a solution method that involves a finite number of constraints, and identify the number of samples sufficient for a good approximation. (C) 2017 Elsevier B.V. All rights reserved.

Item Type: Journal Article
Additional Information: Copy right for this article belongs to the ELSEVIER SCIENCE BV, PO BOX 211, 1000 AE AMSTERDAM, NETHERLANDS
Department/Centre: Division of Electrical Sciences > Electrical Communication Engineering
Depositing User: Id for Latest eprints
Date Deposited: 26 Dec 2017 05:55
Last Modified: 26 Dec 2017 05:55
URI: http://eprints.iisc.ac.in/id/eprint/58440

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