Almost Quasi-linear Utilities in Disguise: Positive-representation An Extension of Roberts' Theorem

TL;DR

This paper extends Roberts' theorem by characterizing VCG mechanisms for preferences represented by positive quasi-linear utilities, broadening the understanding of incentive-compatible social choice rules beyond traditional assumptions.

Contribution

It introduces a new class of preferences called positive-represented quasi-linear utilities and generalizes the characterization of VCG mechanisms to this domain.

Findings

VCG mechanisms are incentive-compatible under positive-represented quasi-linear utilities.

The incentive-compatibility does not depend on money being a common denominator.

The results provide a more complete understanding of utility representation in social choice.

Abstract

This work deals with the implementation of social choice rules using dominant strategies for unrestricted preferences. The seminal Gibbard-Satterthwaite theorem shows that only few unappealing social choice rules can be implemented unless we assume some restrictions on the preferences or allow monetary transfers. When monetary transfers are allowed and quasi-linear utilities w.r.t. money are assumed, Vickrey-Clarke-Groves (VCG) mechanisms were shown to implement any affine-maximizer, and by the work of Roberts, only affine-maximizers can be implemented whenever the type sets of the agents are rich enough. In this work, we generalize these results and define a new class of preferences: Preferences which are positive-represented by a quasi-linear utility. That is, agents whose preference on a subspace of the outcomes can be modeled using a quasi-linear utility. We show that the characterization of VCG mechanisms as the incentive-compatible mechanisms extends naturally to this domain. Our result follows from a simple reduction to the characterization of VCG mechanisms. Hence, we see our result more as a fuller more correct version of the VCG characterization. This work also highlights a common misconception in the community attributing the VCG result to the usage of transferable utility. Our result shows that the incentive-compatibility of the VCG mechanisms does not rely on money being a common denominator, but rather on the ability of the designer to fine the agents on a continuous (maybe agent-specific) scale. We think these two insights, considering the utility as a representation and not as the preference itself (which is common in the economic community) and considering utilities which represent the preference only for the relevant domain, would turn out to fruitful in other domains as well.