Truthful aggregation of budget proposals

Rupert Freeman, David M. Pennock, Dominik Peters and Jennifer Wortman Vaughan

Journal of Economic Theory, 2021, vol. 193, issue C

Abstract: We consider a participatory budgeting problem in which each voter submits a proposal for how to divide a single divisible resource (such as money or time) among several possible alternatives (such as public projects or activities) and these proposals must be aggregated into a single aggregate division. Under ℓ1 preferences—for which a voter's disutility is given by the ℓ1 distance between the aggregate division and the division he or she most prefers—the social welfare-maximizing mechanism, which minimizes the average ℓ1 distance between the outcome and each voter's proposal, is incentive compatible (Goel et al., 2019). However, it fails to satisfy a natural fairness notion of proportionality, placing too much weight on majority preferences. Leveraging a connection between market prices and the generalized median rules of Moulin (1980), we introduce the independent markets mechanism, which is both incentive compatible and proportional. We unify the social welfare-maximizing mechanism and the independent markets mechanism by defining a broad class of moving phantom mechanisms that includes both. We show that every moving phantom mechanism is incentive compatible. Finally, we characterize the social welfare-maximizing mechanism as the unique Pareto-optimal mechanism in this class, suggesting an inherent tradeoff between Pareto optimality and proportionality.

Keywords: Participatory budgeting; Social choice; Mechanism design (search for similar items in EconPapers)
JEL-codes: D63 D71 H41 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:193:y:2021:i:c:s002205312100051x

DOI: 10.1016/j.jet.2021.105234

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