Mechanism Design Powered by Social Interactions

TL;DR

This paper explores how to leverage social interactions and conflict of interest among participants to incentivize recruitment and form larger markets, addressing practical limitations in traditional mechanism design.

Contribution

It introduces a novel approach to incentivize participant recruitment through social interactions and conflict of interest considerations, expanding traditional mechanism design frameworks.

Findings

Proposes incentive mechanisms for participant recruitment via social interactions.

Highlights the role of conflict of interest in incentivizing cooperation.

Discusses open questions in auctions, coalitional games, matching, and voting.

Abstract

Mechanism design has traditionally assumed that the set of participants are fixed and known to the mechanism (the market owner) in advance. However, in practice, the market owner can only directly reach a small number of participants (her neighbours). Hence the owner often needs costly promotions to recruit more participants in order to get desirable outcomes such as social welfare or revenue maximization. In this paper, we propose to incentivize existing participants to invite their neighbours to attract more participants. However, they would not invite each other if they are competitors. We discuss how to utilize the conflict of interest between the participants to incentivize them to invite each other to form larger markets. We will highlight the early solutions and open the floor for discussing the fundamental open questions in the settings of auctions, coalitional games, matching and voting.