Putting Peer Prediction Under the Micro(economic)scope and Making Truth-telling Focal

TL;DR

This paper demonstrates how to modify peer prediction mechanisms in binary signal settings to make truth-telling the most attractive and focal equilibrium, improving incentive alignment for truthful reporting.

Contribution

It introduces a new technical tool for analyzing scoring rules, classifies all equilibria, and optimizes the payoff gap to make truth-telling focal in peer prediction mechanisms.

Findings

Classified all equilibria in binary peer prediction settings

Developed a new tool to enhance truth-telling payoffs

Optimized the mechanism to make truth-telling the most focal equilibrium

Abstract

Peer-prediction is a (meta-)mechanism which, given any proper scoring rule, produces a mechanism to elicit privately-held, non-verifiable information from self-interested agents. Formally, truth-telling is a strict Nash equilibrium of the mechanism. Unfortunately, there may be other equilibria as well (including uninformative equilibria where all players simply report the same fixed signal, regardless of their true signal) and, typically, the truth-telling equilibrium does not have the highest expected payoff. The main result of this paper is to show that, in the symmetric binary setting, by tweaking peer-prediction, in part by carefully selecting the proper scoring rule it is based on, we can make the truth-telling equilibrium focal---that is, truth-telling has higher expected payoff than any other equilibrium. Along the way, we prove the following: in the setting where agents receive binary signals we 1) classify all equilibria of the peer-prediction mechanism; 2) introduce a new technical tool for understanding scoring rules, which allows us to make truth-telling pay better than any other informative equilibrium; 3) leverage this tool to provide an optimal version of the previous result; that is, we optimize the gap between the expected payoff of truth-telling and other informative equilibria; and 4) show that with a slight modification to the peer prediction framework, we can, in general, make the truth-telling equilibrium focal---that is, truth-telling pays more than any other equilibrium (including the uninformative equilibria).