Sharing a Reward Based on Peer Evaluations

TL;DR

This paper explores mechanisms for sharing a fixed reward among agents based on peer evaluations, proposing two methods with different strategic properties and resistance to collusion.

Contribution

Introduces two novel peer-based sharing mechanisms: one strategy-proof and budget-balanced, the other collusion-resistant and incentive-compatible.

Findings

The peer-evaluation mechanism is strategy-proof but can be collusion-prone.

The peer-prediction mechanism is collusion-resistant and incentive-compatible.

Both mechanisms are individually rational and suitable for different strategic environments.

Abstract

We study a problem where a group of agents has to decide how some fixed value should be shared among them. We are interested in settings where the share that each agent receives is based on how that agent is evaluated by other members of the group, where highly regarded agents receive a greater share compared to agents that are not well regarded. We introduce two mechanisms for determining agents' shares: the peer-evaluation mechanism, where each agent gives a direct evaluation for every other member of the group, and the peer-prediction mechanism, where each agent is asked to report how they believe group members will evaluate a particular agent. The sharing is based on the provided information. While both mechanisms are individually rational, the first mechanism is strategy-proof and budget-balanced, but it can be collusion-prone. Further, the second mechanism is collusion-resistant and incentive-compatible.