strategy-proof and efficient fair scheduling · strategy-proof and e cient fair scheduling yuan...

Strategy-proof and Efficient Fair Scheduling

Yuan Tian

Department of Economics

University of Chicago

Yuan Tian (University of Chicago) Mechanism Design of Fair Scheduling 1 / 49

Dynamic or sequential division problems

In each period or batch, an interval of indivisible heterogeneous goods must

be allocated to a set of players;

Goods in early periods must be allocated before those in later periods or

some batches of goods must be divided before other batches;

Players have dichotomous preferences: preference types are represented by

subsets of the goods to be allocated;

Players’ preferences may be dynamically or sequentially revealed to them as

private information;

No monetary transfers allowed.


Applications

Production task assignment on an assembly line;

Allocation of central server computing time;

Plug-in time division of electric car charging stations;

Scheduling of conference rooms;

Circulation of library books.


Contributions and challenges

Construct a dynamically payoff consistent, Pareto efficient, envy-free, and

strategy-proof division mechanism;

Discover a novel comparative statics result for the egalitarian solutions for

monotone and concave cooperative games regarding inter-personal payoff

comparisons;

Key feature of design: periodically promoting egalitarianism among players’

cumulative payoffs achieves strategy-proof-ness;

Major challenge: how to account for the lasting effect of a single player’s

deviation from truth-telling in a single period on the overall distribution of

cumulative payoffs of all players.


A quick demonstration

A set of three players N = {1, 2, 3};

Time horizon: [0, 7]; Interval [t, t + 1] is up for division in period t;

Player 2’s demand is fixed at [1, 2] ∪ [3, 5] ∪ [6, 7];

Player 3’s demand is fixed at [2, 4] ∪ [5, 7];

Player 1’s demand can be either θ1 = [1, 2] ∪ [4, 6] or θ1 = [1, 2] ∪ [3, 6];

How do player 1’s payoffs compare when her type is θ1 versus θ1

according to the mechanism designed in this work?


Cumulative payoff difference

Figure: Exponentiated difference in cumulative payoffs for player 1 with θ1 and θ1

3 3.5 4 4.5 5 5.5 61.3951

1.3952

1.3953

1.3954

1.3955

1.3956

1.3957

Time

Expo

nenti

ated c

umula

tive p

ayoff

diffe

rence

Student Version of MATLAB


Selected literature

Egalitarian solutions: Dutta and Ray (1989), Chen et al. (2013);

Assignment problems: Hylland and Zeckhauser (1979), Zhou (1990),Bogomolnaia and Moulin (2001), Bogomolnaia and Moulin (2004),Hashimoto et al. (2014);

Fair divisions: Neyman (1946), Steinhaus (1948), Weller (1985), Aziz and Ye(2014), Brams et al. (2006), Brams et al. (2008), Mossel and Tamuz (2010),Procaccia (2013);

Income distribution: Dasgupta et al. (1973), Rothschild and Stiglitz (1973),Shorrocks (1983);

Monotone comparative statics: Quah (2007), Topkis (1978), Topkis (2001),Milgrom and Shannon (1994), Vives (1990);

Dynamic mechanism design: Athey and Segal (2013), Bergemann andValimaki (2010), Gallien (2006), Pai and Vohra (2013), Pavan et al. (2013).


Overview

1 Introduction

2 Monotone and Concave Cooperative Games and Egalitarian Solutions

3 Sequential or Dynamic Division Problems

4 Sequential or Dynamic Division Mechanisms

5 Discussions

6 Conclusions and Future Research


Overview

1 Introduction




5 Discussions



Cooperative games in characteristic function form

A game Γ = (N, v(·)) with a set of players N where |N| = n < +∞:

The characteristic function v : 2N → R+ such that v(∅) = 0;

Γ is monotone if and only if for all S ⊆ T ⊆ N, v(S) ≤ v(T );

Γ is concave if and only if for all S ⊆ N and T ⊆ N,

v(S ∪ T ) + v(S ∩ T ) ≤ v(S) + v(T ).

For monotone and concave Γ and a ∈ Rn+ and b > 0, Γ ≡ (N, v(·))

with v(S) = b · v(S) +∑

i∈S

ai ,∀S ⊆ N

is also a monotone and concave game.


Lorenz dominance

Given any z ∈ Rn+, let z be the vector generated by rearranging the entries of

z in a weakly increasing order;

Given two vectors y ∈ Rn+ and y ∈ Rn

+ such thatn∑

i=1

yi =n∑

i=1

yi ,

y Lorenz dominates y iff ∀1 ≤ m ≤ n,m∑

i=1

yi ≥m∑

i=1

yi ;

Lorenz dominance is an antisymmetric partial order of y and y;

Mutual Lorenz dominance between y and y ⇒ y is a permutation of y .


Generalized Lorenz dominance (Shorrocks (1983))

Given two vectors y ∈ Rn+ and y ∈ Rn

+,

y generalized Lorenz dominates y iff ∀1 ≤ m ≤ n,m∑

i=1

yi ≥m∑

i=1

yi ;

Generalized Lorenz dominance does not requiren∑

i=1

yi =n∑

i=1

yi ;

y generalized Lorenz dominating y implies thatn∑

i=1

yi ≥n∑

i=1

yi ;

Generalized Lorenz dominance implies Lorenz dominance;


Egalitarian solutions to concave cooperative games

Definition (Egalitarian solution)

The egalitarian solution of a monotone and concave game Γ = (N, v(·)), where

n = |N|, is a vector y∗ ∈ Rn+ such that

y∗ is not generalized Lorenz dominated by any y ∈ Rn+ such that

y ∈{z ∈ Rn

+ :∑

i∈S

zi ≤ v(S),∀S ⊆ N

}≡ V .

From now on, let e(T − S) represent the average incremental from S to T :

∀S ⊂ T ⊆ N, e(T − S) ≡ v(T )− v(S)

|T | − |S | .


Algorithm E Example of Algorithm E

Definition (Algorithm E)

Given any monotone and concave game Γ = (N, v(·)),

1 Let S0 = ∅ and ∅ ⊂ S1 ⊆ N be one of the smallest candidates that

e(S1 − ∅) ≤ e(S − ∅),∀∅ ⊂ S ⊆ N;

2 For all k ≥ 1, let Sk+1 ⊃ Sk be one of the smallest candidates that

e (Sk+1 − Sk) ≤ e(S − Sk),∀S ⊃ Sk ;

3 Terminate in step K if the only candidate for SK is N;

4 Set y∗i = e (Sk+1 − Sk) if i ∈ (Sk+1\Sk) for some 0 ≤ k ≤ (K − 1);

5 For all i ∈ N, the clique of i at y∗: Qi (y∗) ≡ (Sk+1\Sk) if i ∈ (Sk+1\Sk).


Algorithm E : feasibility and dominance

Lemma (Feasibility and dominance)

For any monotone and concave game Γ = (N, v(·)),

1 Algorithm E is well-defined and e(Sk+1 − Sk) ≥ e(Sk − Sk−1); Appendix: proof

2 The y∗ generated by Algorithm E is an element of the feasible set V ;

3 y∗ generalized Lorenz dominates any y ∈ V .

1 Show that there is a smallest candidate in each step of Algorithm E ;

2 Induction on k for subsets of Sk ;

3 By contradiction:∑m

i=1 yi >∑m

i=1 yi implies that y /∈ V .


“Duality” of egalitarian solutions

Lemma (“Duality”)

Given a monotone and concave game Γ = (N, v(·)), let {Sk}Kk=1 be any sequence

of subsets generated by Algorithm E . Then

∀1 ≤ k ≤ K , e(Sk − Sk−1) = maxS⊂Sk

e(Sk − S).

Proof plan: induction on k for subsets of Sk . Step 1 in Algorithm E :

∀∅ 6= S ⊂ S1, e(S1 − ∅) = e(S1 − S)|S1| − |S ||S1|

+ e(S − ∅)︸︷︷︸≥e(S1−∅)

|S ||S1|

;

Suppose true for k > 1: ∀S ⊂ Sk , e (Sk − S) ≤ e (Sk − Sk−1);

Want to show that ∀S ⊂ Sk+1, e (Sk+1 − S) ≤ e (Sk+1 − Sk).


Proof of “Duality”

S ⊂ Sk or Sk ⊂ S ⊂ Sk+1. Otherwise, (Sk ∩ S) ⊂ Sk and (Sk ∪ S) ⊃ Sk .

≤e(Sk+1−Sk )︷︸︸︷e(Sk+1 − S) =

|Sk+1| − |Sk ||Sk+1| − |S |

≥e(Sk−Sk−1)︷︸︸︷e(Sk+1 − Sk) +

|Sk | − |S ||Sk+1| − |S |

≤e(Sk−Sk−1)︷︸︸︷e(Sk − S) ,

e(Sk+1 − Sk)︸︷︷︸≥e(Sk+1−S)

=|Sk+1| − |S ||Sk+1| − |Sk |

e(Sk+1 − S) +|S | − |Sk ||Sk+1| − |Sk |

e(S − Sk)︸︷︷︸≥e(Sk+1−Sk )

;

≤e(Sk+1−Sk )︷︸︸︷e (Sk+1 − S) ≤

≤e(Sk+1−Sk )︷︸︸︷e (Sk+1 − (Sk ∪ S))

|Sk+1| − |Sk ∪ S ||Sk+1| − |S |

+ e (Sk − (Sk ∩ S))︸︷︷︸≤e(Sk−Sk−1)

|Sk | − |Sk ∩ S ||Sk+1| − |S |

.


A thought experiment of changing a game

Given a game Γ = (N, v(·)), what if a player i enlarges the feasible set?

Some restrictions for how i changes the game Γ:

1 i does not affect any group excluding i ;

2 i only increases the values of groups including i ;

3 i affects smaller groups including i more than larger groups.

How will such changes affect the egalitarian solution y∗ of Γ?


Comparative statics of egalitarian solutions

Theorem (Maximal increase)

Let Γ = (N, v(·)) and Γ = (N, v(·)) be two monotone and concave games such

that there exists a unique i ∈ N such that, for all S ⊆ N,

1 i /∈ S ⇒ v(S) = v(S);

2 i ∈ S ⇒ v(S) ≤ v(S);

3 i ∈ S ⊂ T ⇒ v(T )− v(T ) ≤ v(S)− v(S).

Let y∗ and y∗ be the egalitarian solutions of Γ and Γ, respectively. ∀j ∈ N,

y∗i − y∗i ≥ y∗j − y∗j . (1)


Proof of Maximal increase I

From an earlier paper Tian (2013): y∗i ≥ y∗i ;

For any j ∈ N such that y∗j ≤ y∗i and j /∈ Qi (y∗), y∗j = y∗j by Algorithm E ;

For any j ∈ N such that y∗j ≥ y∗i and y∗j ≤ y∗i , y∗i − y∗i ≥ y∗j − y∗j ;

Hence, take any j such that y∗j ≥ y∗i and y∗j > y∗i ; Want to show y∗j ≤ y∗j ;

Let Sl+1 be the first entry in the sequence{Sl

}L

l=1of subsets of N

generated by Algorithm E for Γ such that (Sk+1\Sk) = Qj(y∗) ⊆ Sl+1,

where{Sk}Kk=1

is the sequence generated by Algorithm E for Γ;

Keep in mind that this implies y∗j = e (Sk+1 − Sk);


Proof of Maximal increase II

Thus,(Sk+1 ∪ Sl

)⊃ Sl and

(Sk+1 ∩ Sl

)⊂ Sk+1.

Notice that y∗j > y∗i implies that i ∈ Sl by the definition of Algorithm E ;

y∗j ≤v(Sl+1

)− v

(Sl)

∣∣∣Sl+1

∣∣∣−∣∣∣Sl∣∣∣

Definition of Algorithm E︷︸︸︷

≤v(Sl ∪ Sk+1

)− v

(Sl)

∣∣∣Sl ∪ Sk+1

∣∣∣−∣∣∣Sl∣∣∣

≤v(Sl ∪ Sk+1

)− v

(Sl)

∣∣∣Sl ∪ Sk+1

∣∣∣−∣∣∣Sl∣∣∣

︸︷︷︸i affects smaller sets more

≤v (Sk+1)− v

(Sl ∩ Sk+1

)

|Sk+1| −∣∣∣Sk+1 ∩ Sl

∣∣∣︸︷︷︸

by concavity of Γ

≤ e (Sk+1 − Sk)︸︷︷︸by “Duality”

.


Unilateral disturbance

Lemma (Unilateral disturbance)

Let Γ = (N, v(·)) and Γ = (N, v(·)) be two monotone and concave games such

that there exists a unique i ∈ N such that, for all S ⊆ N,

1 i /∈ S ⇒ v(S) = v(S);

2 i ∈ S ⇒ v(S) ≤ v(S);

3 i ∈ S ⊂ T ⇒ v(T )− v(T ) ≤ v(S)− v(S).

Let y∗ and y∗ be the egalitarian solutions for Γ and Γ, respectively. Then

y∗i = y∗i ⇒ y∗ = y∗. Otherwise,[y∗j ≥ y∗i and j /∈ Qi (y∗)

]⇒ y∗j ≤ y∗j .


Overview

1 Introduction




5 Discussions



Players and types

A finite set N = {1, 2, 3, · · · , n} of players; The planner is player 0;

Time periods, finite or infinite, T ≡ {t}T−1t=0 ; |T | = T ≤ +∞;

In period t, a unit interval [t, t + 1] ⊂ R+ is up for division;

Player i ’s type in period t: θit ⊆ [t, t + 1]; Player i ’s type: θi ≡⋃

t∈Tθit ;

θit ∈ Θt is a finite collection of mutually disconnected closed intervals;

Profile of all players’ types in period t is represented by ~θt ≡ (θit)i∈N ;

Profile of all players’ types: θ ≡ (θi )i∈N =(θi , (θj)j∈(N\{i})

)≡ (θi , θ−i ).


Feasible divisions and preferences

A feasible division is a function C : R+ → N ∪ {0};

Set of all feasible divisions is represented by C;

The indicator function for player i given C : 1Ci (r) =

{1 if C (r) = i ,

0 otherwise;

i ’s discount factor for period t: βit > 0, ∀(i , t) ∈ N × T ;

i ’s period-t canonical utility of C given type θi : uit (C |θi ) ≡∫

θit

1Ci (r) dr ;

i ’s canonical utility of C given type θi : ui (C |θi ) ≡T−1∑

t=0

βituit (C |θi );

Profile of all players’ period-t canonical utilities of C with θ: ~ut (C |θ).


Properties of feasible divisions

A feasible division C is Pareto efficient if and only if

there does not exist a feasible division C ′ 6= C such that

ui (C ′|θi ) ≥ ui (C |θi ) , ∀i ∈ N,

with the inequality being strict for at least one i ;

A feasible division C is envy-free if and only if for all (i , j) ∈ N × N,

ui (C |θi ) ≥T−1∑

t=0

βit

∫

θit

1Cj (r) dr .


Three assumptions

Assumption (Common discount factor)

There exists a sequence {βt}T−1t=0 such that βit = βt , for all (i , t) ∈ N × T .

Assumption (Finite maximum utility)

T−1∑

t=0

βt < +∞.

Assumption (Finite type space)

∀(i , t,

(θit , θit

))∈(N × T ×Θ2

t

), θit ∩ θit ∈ Θt , θit ∪ θit ∈ Θt , and |Θt | < +∞.


Information structure and direct mechanisms

{βt}T−1t=0 and {Θt}T−1

t=0 are common knowledge among N ∪ {0};

For any player i , θi is player i ’s private information;

Players’ types can be dynamically revealed to the players:

However, θit must be revealed to i before t;

The space of all possible types is represented by Θ ≡T−1∏

t=0

Θt ;

A direct mechanism (or “mechanism”) is a function M : Θn → C.


Properties of mechanisms

M is strategy-proof if and only if ∀(i ,(θi , θi

), θ−i

)∈(N ×Θ2 ×Θn−1

),

ui (M(θi , θ−i )|θi ) ≥ ui(M(θi , θ−i

)|θi)

;

M is payoff consistent (or “consistent”) if and only if

∀(θ, θ, t

)∈ (Θn ×Θn × T ) , ~θt =

~θt for all 0 ≤ t ≤ t implies that

uit (M (θ) |θi ) = uit(M(θ)|θi), ∀i ∈ N and 0 ≤ t ≤ t;

M is Pareto efficient (envy-free) if and only if

M(θ) is a Pareto efficient (envy-free) feasible division for all θ ∈ Θn.


Overview

1 Introduction




5 Discussions



Notations

For all 1 ≤ t ≤ T , let χt ≡t−1∑

s=0

βs ;

For all (θ,S , t) ∈ Θn × 2N × T , let v(S |~θt

)≡∫⋃

i∈S θit

1 dr ;

For all S ⊂ T ⊆ N, let e(T − S |~θt

)≡

v(T |~θt

)− v

(S |~θt

)

|T | − |S | ;

Let V(~θt

)≡{y ∈ Rn

+ :∑

i∈S

yi ≤ v(S |~θt

), ∀S ⊆ N

};

Let Et ≡{e(T − S |~θt

):(S ,T , ~θt

)∈(2N , 2N ,Θn

t

),S ⊂ T ⊆ N

}∪ {0};

Let δt ≡ min{βt · |z1 − z2| : (z1, z2) ∈ E 2

t and (z1 − z2) 6= 0}⇒ δt > 0.


Two sequences

Definition (Two Sequences)

Recursively define two sequences {ρt}T−1t=1 and {∆t}Tt=1 as follows:

1 Set ∆1 = δ0; Set ρ1 so that 0 < ρ1 < min

{∆1

χ1 + ∆1,δ1

2χ1

}< 1;

Set ∆2 = min {(1− ρ1) ∆1, δ1} − ρ1χ1 > 0;

2 Given ∆t , set ρt so that 0 < ρt < min

{∆t

χt + ∆t,δt

2χt

}< 1;

Set ∆t+1 = min {(1− ρt) ∆t , δt} − ρtχt > 0.


Mechanism R Formal definition

Let W : R+ → R be strictly increasing and strictly concave and continuous on R+;

Given any type profile θ, R(θ) is recursively constructed as follows:

1 In period 0, select C1 ∈ C to maximize∑

i∈N

W (ui0 (C1|θi )) within V(~θ0

);

2 Given Ct ∈ C, let xit (Ct |θi ) ≡t−1∑

s=0

βsuis (Ct |θi );

3 In period t, select Ct+1 ∈ C to replicate Ct up to t

and to maximize∑

i∈N

W (ρtxit(Ct |θi ) + βtuit (Ct+1|θi )) within V(~θt

);

4 In any period s, only select feasible divisions so that r /∈ θis ⇒ Cs+1(r) 6= i .


The result

Proposition (C-PE-EF-SP)

Mechanism R is consistent, Pareto efficient, envy-free, and strategy-proof.

Consistency: by definition;

The maximizer of∑

i∈N

W (ρtxit(Ct |θi ) + βtuit (Ct+1|θi )) in V(~θt

)is unique;

Pareto efficiency: by definition;

∑

i∈N

W (ρtxit(Ct |θi ) + βtuit (Ct+1|θi )) is strictly increasing in uit(·|·);

Hence, focus on envy-free-ness and strategy-proof-ness;

When clear, notations regarding θ may be dropped for brevity.


Envy-free-ness: what if i envies j in period τ

Suppose R is not envy-free. Then there exists a triple (i , j , τ) ∈ N × N × T :

0 ≤ uiτ (R(θ)|θi ) <∫

θiτ

1R(θ)j (r) dr ≤ ujτ (R(θ)|θj) ; (2)

⇒ ρτxiτ + βτuiτ ≥ ρτxjτ + βτujτ

ρτ<1===⇒ xiτ − xjτ ≥

βτ (ujτ − uiτ )

ρτ> βτ (ujτ − uiτ );

(3)

Since, otherwise, a transfer from j to i in τ will increase∑

i∈N

W (xiτ , uiτ );

(2) and (3) together imply xi(τ+1) > xj(τ+1): i does not envy j by (τ + 1).


For strategy-proof-ness: observations of Mechanism R

Fix a profile θ and period t; For any S ⊆ N, let xSt ≡∑

i∈S xit

|S | ;

Define period game Γt ≡(N, v

(·|~θt))

and let u∗t be its egalitarian solution;

When [t, t + 1] is divided by Mechanism R, uit = u∗it −ρt

(xit − x

Qi (u∗t )

t

)

βt;

After [t, t + 1] is divided, xi(t+1) = βtu∗it + (1− ρt)xit + ρt x

Qi (u∗t )

t ;


Strategy-proof-ness: plan of the proof

“One-shot deviation principle” by Blackwell (1965) applies;

Suppose only player i deviates only in period τ ;

Suffices to just consider deviations to supersets or subsets (Tian (2013));

Focus on deviations to supersets of the true type: let θiτ ⊃ θiτ ;

Suffices to show: uiτ ≥ uiτ ;

And ∀t > 1, xi(τ+t) − xi(τ+t) ≤ xi(τ+1) − xi(τ+1);

And ∀t > 1, xi(τ+t) − xi(τ+t) ≥ 0. Details


Strategy-proof-ness: sketch of the proof

When u∗iτ = u∗iτ , Mechanism R proceeds identically for θiτ and θiτ ; Unilateral

Instead, βt ·>0︷︸︸︷

(uiτ − uiτ ) =

>0︷︸︸︷βt · (u∗iτ − u∗iτ ) −

<βt ·(u∗iτ−u∗iτ )︷︸︸︷

ρt

(xQi (u

∗t )

t − xQi (u

∗t )

t

); Sequences

Moreover, for all j 6= i ,(xi(τ+1) − xi(τ+1)

)≥(xj(τ+1) − xj(τ+1)

); Details

For all t ≥ 1, Details

xi(τ+t+1) − xi(τ+t+1) ≤maxj∈N

{xj(τ+t+1) − xj(τ+t+1)

}

≤maxj∈N

{xj(τ+t) − xj(τ+t)

}≤ · · · ≤ xi(τ+1) − xi(τ+1).


Overview

1 Introduction




5 Discussions



Why are the ρt ’s so small?

Example (ρt = 1)

N = {1, 2, 3}, T = 25, Θt = {∅, [t, t + 1]};

Set ρt = 1 for all 1 ≤ t ≤ 24—call this mechanism R1;

Fix θ1 = [0, 11] ∪ [20, 25] and θ2 = [7, 17];

Deviating agent 3: θ3 = [5, 25] and θ3 = [9, 25];

u3 (R1 (θ3, θ−3) |θ3) = 9.5 < 10 = u3

(R1

(θ3, θ−3

)|θ3

);


Period and cumulative allocations for ρt = 1Table 5: Period and cumulative payoffs by rt = 1 for q and q

i\t 5 6 7 8 9 10 11 12 13 14 15 16... ...20 21 22 23 24 u

1y 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 .5 NA

1x 5 5 5 5 5 5 5 5 5 5 5 5 5 6 7 8 9 9.5

2y 0 0 1 1 .5 .5 .5 .5 .5 .5 .5 .5 0 0 0 0 0 NA

2x 0 0 0 1 2 2.5 3 3.5 4 4.5 5 5.5 6 6 6 6 6 6

3y 1 1 0 0 .5 .5 .5 .5 .5 .5 .5 .5 0 0 0 0 .5 NA

3x 0 1 2 2 2 2.5 3 3.5 4 4.5 5 5.5 9 9 9 9 9 9.5

1y 1 1 0 0 0 0 0 0 0 0 0 0 1 .5 .5 .5 .5 NA

1x 5 6 7 7 7 7 7 7 7 7 7 7 7 8 8.5 9 9.5 10

2y 0 0 1 1 0 0 .5 .5 .5 .5 .5 .5 0 0 0 0 0 NA

2x 0 0 0 1 2 2 2 2.5 3 3.5 4 4.5 5 5 5 5 5 5

3y 0 0 0 0 1 1 .5 .5 .5 .5 .5 .5 0 .5 .5 .5 .5 NA

3x 0 0 0 0 0 1 2 2.5 3 3.5 4 4.5 8 8 8.5 9 9.5 10

Periods 1 through 4 and 17 through 19 are ignored since there is only one player (player 1 and 3, respectively) whose

type includes these periods.

Definition 3. Fix the types of players 1 and 2 and consider two different preferences for player 3:946

8>><>>:

q1 = [0,11][ [20,25], q2 = [7,17], q3 = [5,25] [q ] ;

q1 = [0,11][ [20,25], q2 = [7,17], q3 = [9,25]⇥q⇤.

The outcome of this alternative mechanism is presented in Table 5. Notice that a player with type947

q3 will receive a strictly higher payoff by misrepresenting as q3. Observe that player 3 actually948

deviates in more than one period in this example.949

The spirit of this alternative mechanism is actually identical to that of Mechanism R—both950

build in a reward and punishment mechanism when dividing in period t that is based on players’951

cumulative payoffs up until bt . The difference lies in the seemingly insignificantly small reward952

or punishment given by Mechanism R that has an ample effect on incentives. Take a deviation953

45

Table: Columns represent periods; Clear rows represent period allocations in therespective period; Shaded rows represent cumulative allocations before the corresponding

periods; Top (bottom) half represents when 3 reports θ3

(θ3

).


Why are the ρt ’s not zero then?

A pure strategy for player i : σi : Θ→ Θ;

Given a mechanism M, a profile of pure strategies σ ≡ (σi (·))i∈N comprises a

pure strategy Nash equilibrium (PSNE) if and only if, for all i , there does

not exist a σ′i 6= σi such that

ui (M (σ′i (θi ), θ−i ) |θi ) ≥ ui (M (σi (θi ), θ−i ) |θi ) ,∀θ ∈ Θn

with the inequality being strict for at least one θ;

Let Σ(M) represent the set of all PSNE’s of mechanism M.


Efficiency measure: price of anarchy

Given any mechanism M, define the price of anarchy (POA) of M as

POA (M) ≡ supθ∈Θn

T−1∑

t=0

βt

∫

(⋃

i∈N θi)∩[t,t+1]

1 dr

infσ∈Σ(M)

∑

i∈N

ui (M (σ(θ)) |θi )

;

Order of computation: fix a type profile θ, compute the ratio between

the maximum achievable total payoff and

the total payoff from the worst performing PSNE;

Calculate the highest aforementioned ratio among all type profiles.


Infinite refined division problems and ρt = 0

An infinite refined problem is one where Θt = {∅, [t, t + 1]}

T = +∞ and θi is an infinite union of the intervals in {[t, t + 1]}+∞t=0 ;

Let R0 be defined by setting ρt = 0, for all t ≥ 0;

R0 equally divides [t, t + 1] among all players demanding [t, t + 1];

Reporting demand for R+ is a weakly dominant strategy for all players;

Truth-telling is the strictly dominant strategy for all players for R. Details


Price of anarchy comparison

Proposition

POA (R0) ≥ n = |N| while POA (R) = 1.

Focus on POA (R0):

Suffices to construct an example where the ratio in the definition of POA is n;

Consider θi =⋃

k∈N∪{0}

[i + kn, i + kn + 1] but θi = R+, ∀i ;

Any interval is demanded by only one player but equally divided among all.


Overview

1 Introduction




5 Discussions



Recap

Devised a strategy to construct a consistent, Pareto efficient, envy-free, andstrategy-proof dynamic division mechanism R for players with potentiallydynamically revealing dichotomous preferences;

Accommodated infinite time horizon with a common discount factor;

Design of Mechanism R can be easily extended to division problems withtime varying length of intervals;

Mechanism R possesses strict incentive properties and stronger efficiencyperformance than repetition of equal divisions for infinite refined problems byat least a factor of the size of the set of players;

Discovered a novel comparative statics result on the egalitarian solutions ofmonotone and concave cooperative games involving inter-player comparisonof changes in payoffs.


Future research

Axiomatization of dynamic division mechanisms;

Development of fairness and incentive measures and improvement ofefficiency measures;

Characterization of potential “efficiency-fairness-incentive” frontiers fordivision problems;

Characterization of maximal domain for compatibility of PE, EF, and SP inexchange economies and renewed examination of price formation mechanisms;

(Wild) conjecture: for any domain where there exists a division mechanismthat accommodates PE, EF, and SP, the mechanism must be thepseudo-market equilibrium mechanism in Hylland and Zeckhauser (1979).


Thank You!


Proof of Feasibility and dominance I

Lemma

Let Γ = (N, v(·)) be a monotone and concave game,

1 ∀R ⊂ S ⊂ T ⊆ N,

e(T − R) = e(S − R)⇒ e(T − R) = e(S − R) = e(T − S);

2 ∀R ⊂ T ⊆ N and R ⊂ S ⊆ N, where R ⊂ (T ∩ S) and T 6⊆ S and S 6⊆ T ,

such that e(S − R) = e(T − R), then

min {e [(T ∪ S)− R] , e [(T ∩ S)− R]} ≤ e(S − R) = e(T − R);

3 ∀R ⊂ T ⊆ N and R ⊂ S ⊆ N, where R = (T ∩ S) and T 6⊆ S and S 6⊆ T ,

such that e(S − R) = e(T − R), then

e[(T ∪ S)− R] ≤ e(S − R) = e(T − R).


Proof of Feasibility and dominance II

Proof.

1 e(T − R) = e(T − S) · |T | − |S ||T | − |R| + e(S − R) · |S | − |R||T | − |R| ;

2 By the concavity of Γ, Back

e [(T ∩ S)− R] · (|T ∩ S | − |R|) + e [(T ∪ S)− R] · (|T ∪ S | − |R|)

≤ e(S − R) · (|T ∪ S |+ |T ∩ S | − 2|R|) ;

3 e[(T ∪ S)− R](|T ∪ S | − |R|) ≤ e(T − R) · (|T |+ |S | − 2|R|).

e (Sk+1 − Sk−1) =e (Sk+1 − Sk) · |Sk+1| − |Sk ||Sk+1| − |Sk−1|

+ e (Sk − Sk−1) · |Sk | − |Sk−1||Sk+1| − |Sk−1|

.


Formal definition of Mechanism R Back to main text

Definition (Mechanism R)

Let {ρt}T−1t=1 be any sequence selected in Two Sequences. Given any type profile θ,

1 Select any feasible division C1 such that

~u0 (C1|θ) = arg maxy∈V (~θ0)

∑

i∈N

W1(yi ) and r /∈ θi ⇒ C1(r) 6= i ,∀r ∈ R+

for a strictly increasing and strictly concave W1 : R+ → R continuous on R+;

2 Given Ct , select any Ct+1 such that Ct+1(r) = Ct(r) for all r ≤ t and

~ut(Ct+1|θ) = arg maxy∈V (~θt)

∑

i∈N

Wt+1 (ρt · xit(Ct |θi ) + βtyi ) ≡ ~yt+1

(~θt

)(4)

and r /∈ θi ⇒ Ct+1(r) 6= i ,∀r ∈ R+, for any strictly increasing and strictlyconcave function Wt+1 : R+ → R continuous on R+;

3 Define R(θ) to be the pointwise limit of the sequence {Ct}Tt=1.


Details for Proof for SP I

1 j /∈ Qi (u∗τ )⇒ ≤ 0⇒ ® < ¬; Sequences

2 j ∈ Qi (u∗τ ) and j ∈ Qi (u∗τ ), ®= 0⇒ ¬ ≥ ; Maximal increase

3 j /∈ Qi (u∗τ )⇒ ≤ 0⇒ ® < ¬. Sequences Back

(xi(τ+1) − xi(τ+1)

)−(xj(τ+1) − xj(τ+1)

)=

¬︷︸︸︷βτ (u∗iτ − u∗iτ )−βτ

︷︸︸︷(u∗jτ − u∗jτ

)

+ ρτ

[(xQi (u

∗τ )

τ − xQi (u

∗τ )

τ

)−(xQj (u

∗τ )

τ − xQj (u

∗τ )

τ

)]

︸︷︷︸®

.


Details for Proof for SP II

By the definition {∆t}Tt=1, xi(τ+1)− xi(τ+1) ≥ ∆τ+1. By the definition of {ρt}T−1t=1 ,

xi(τ+t)−xi(τ+t) ≥ ∆τ+t ⇒ xi(τ+t+1) − xi(τ+t+1)

= (1− ρτ+t)(xi(τ+t) − xi(τ+t)

)+ ρτ+t

(xQj(u∗τ+t)τ+t − x

Qj(u∗τ+t)τ+t

)

≥(1− ρτ+t)∆τ+t − ρτ+tχτ+t ≥ ∆τ+t+1 > 0;

xj(τ+t+1) − xj(τ+t+1) = (1− ρτ+t)

¬︷︸︸︷(xj(τ+t) − xj(τ+t)

)

+ρτ+t

(xQj(u∗τ+t)τ+t − x

Qj(u∗τ+t)τ+t

)

︸︷︷︸

;

Both ¬ and are less than or equal to maxj∈N

{xj(τ+t) − xj(τ+t)

}. Back Back


Details for price of anarchy

Consider only i deviates in period τ ;

For any player j ,

xj(τ+1) − xj(τ+1) = βτ(u∗jτ − u∗jτ

)+ ρt

(xQj (u

∗τ )

τ − xQj (u

∗τ )

τ

)

⇒[u∗jτ > u∗jτ ⇐⇒ xj(τ+1) > xj(τ+1)

];

Also, because of equal division, u∗iτ > u∗iτ ⇐⇒ u∗jτ < u∗jτ ;

Hence, u∗iτ > u∗iτ ⇒ xi(τ+2) − xi(τ+2) < xi(τ+1) − xi(τ+1);

While, u∗iτ > u∗iτ ⇒ xi(τ+t) − xi(τ+t) > 0, ∀t ≥ 1. Back


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