New directions in mechanism design

TL;DR

This paper introduces the X mechanism and three new concepts—partly truthful, critical, and consistent—that extend traditional mechanism design, aiming to improve utility optimization beyond the limitations of truthful mechanisms like VCG.

Contribution

The paper proposes a novel X mechanism and three new mechanism properties, expanding the scope of mechanism design beyond truthfulness.

Findings

X mechanism outperforms VCG in utility optimization

Partly truthful, critical, and consistent are essential new directions

X mechanism generalizes Vickrey auctions in many aspects

Abstract

Mechanism design uses the tools of economics and game theory to design rules of interaction for economic transactions that will,in principle, yield some de- sired outcome. In the last few years this field has received much interest of researchers in computer science, especially with the Internet developing as a platform for communications and connections among enormous numbers of computers and humans. Arguably the most positive result in mechanism de- sign is truthful and there are only one general truthful mechanisms so far : the generalized Vickrey-Clarke-Groves (VCG) mechanism. But VCG mecha- nism has one shortage: The implementation of truthfulness is on the cost of decreasing the revenue of the mechanism. (e.g., Ning Chen and Hong Zhu. [1999]). We introduce three new characters of mechanism:partly truthful, criti- cal, consistent, and introduce a new mechanism: X mechanism that satisfy the above three characters. Like VCG mechanism, X mechanism also generalizes from Vickery Auction and is consistent with Vickery auction in many ways, but the extended methods used in X mechanism is different from that in VCG mechanism . This paper will demonstrate that X mechanism better than VCG mechanism in optimizing utility of mechanism, which is the original intention of mechanism design. So partly truthful,critical and consistent are at least as important as truthful in mechanism design, and they beyond truthful in many situations.As a result, we conclude that partly truthful,critical and consistent are three new directions in mechanism design.