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Routing-Proofness in Congestion-Prone Networks

Ruben Juarez () and Michael Wu ()
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Ruben Juarez: Department of Economics, University of Hawaii, 2424 Maile Way, Saunders Hall 542, Honolulu, HI 96822, USA
Michael Wu: Department of Economics, University of Hawaii, 2424 Maile Way, Saunders Hall 542, Honolulu, HI 96822, USA

Games, 2019, vol. 10, issue 2, 1-18

Abstract: We consider the problem of sharing the cost of connecting a large number of atomless agents in a network. The centralized agency elicits the target nodes that agents want to connect, and charges agents based on their demands. We look for a cost-sharing mechanism that satisfies three desirable properties: efficiency which charges agents based on the minimum total cost of connecting them in a network, stand-alone core stability which requires charging agents not more than the cost of connecting by themselves directly, and limit routing-proofness which prevents agents from profitable reporting as several agents connecting from A to C to B instead of A to B. We show that these three properties are not always compatible for any set of cost functions and demands. However, when these properties are compatible, a new egalitarian mechanism is shown to satisfy them. When the properties are not compatible, we find a rule that meets stand-alone core stability, limit routing-proofness and minimizes the budget deficit.

Keywords: cost sharing; core stability; routing proofness (search for similar items in EconPapers)
JEL-codes: C C7 C70 C71 C72 C73 (search for similar items in EconPapers)
Date: 2019
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