Reallocation Mechanisms

TL;DR

This paper develops incentive-compatible, individually-rational, and budget-balanced mechanisms for resource reallocation problems with complex preferences, achieving near-optimal efficiency across various classic economic settings.

Contribution

It introduces new mechanisms that are incentive-compatible, individually rational, and budget-balanced, providing constant approximation to optimal efficiency in complex multi-parameter settings.

Findings

Most mechanisms achieve constant approximation to optimal efficiency.

Mechanisms work across diverse settings like bilateral trade and markets.

All but one mechanism maintain incentive compatibility and individual rationality.

Abstract

We consider reallocation problems in settings where the initial endowment of each agent consists of a subset of the resources. The private information of the players is their value for every possible subset of the resources. The goal is to redistribute resources among agents to maximize efficiency. Monetary transfers are allowed, but participation is voluntary. We develop incentive-compatible, individually-rational and budget balanced mechanisms for several classic settings, including bilateral trade, partnership dissolving, Arrow-Debreu markets, and combinatorial exchanges. All our mechanisms (except one) provide a constant approximation to the optimal efficiency in these settings, even in ones where the preferences of the agents are complex multi-parameter functions.