Efficiency and budget balance in general quasi-linear domains

Swaprava Nath and Tuomas Sandholm

Games and Economic Behavior, 2019, vol. 113, issue C, 673-693

Abstract: We consider efficiency and budget balance in general quasi-linear domains. Green and Laffont (1979) proved that one cannot generically achieve both. We consider strategyproof budget-balanced mechanisms with bounded valuations that are approximately efficient. We show that a deterministic, strategyproof, and budget-balanced mechanism must have a sink whose valuation is ignored in the decision, and is compensated with all the leftover money. We find a tight lower bound on the inefficiencies of strategyproof, budget-balanced mechanisms using this result. The bound shows that the inefficiency asymptotically disappears when the number of agents is large—we provide worst-case bounds and the best possible rate of convergence.

Keywords: Quasi-linear preferences; Efficiency; Budget balance; Affine maximizer; Green–Laffont impossibility (search for similar items in EconPapers)
JEL-codes: D71 D74 D82 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:113:y:2019:i:c:p:673-693

DOI: 10.1016/j.geb.2018.11.010

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