From Monetary to Nonmonetary Mechanism Design via Artificial Currencies

Artur Gorokh (), Siddhartha Banerjee () and Krishnamurthy Iyer
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Artur Gorokh: Center for Applied Mathematics, Cornell University, Ithaca, New York 14850
Siddhartha Banerjee: Operations Research and Information Engineering, Cornell University, Ithaca, New York 14850

Mathematics of Operations Research, 2021, vol. 46, issue 3, 835-855

Abstract: Nonmonetary mechanisms for repeated allocation and decision making are gaining widespread use in many real-world settings. Our aim in this work is to study the performance and incentive properties of simple mechanisms based on artificial currencies in such settings. To this end, we make the following contributions: For a general allocation setting, we provide two black-box approaches to convert any one-shot monetary mechanism to a dynamic nonmonetary mechanism using an artificial currency that simultaneously guarantees vanishing gains from nontruthful reporting over time and vanishing losses in performance. The two mechanisms trade off between their applicability and their computational and informational requirements. Furthermore, for settings with two agents, we show that a particular artificial currency mechanism also results in a vanishing price of anarchy.

Keywords: Primary: 91A06; 91A10; Primary: bidding/auctions; dynamic mechanism design; artificial currencies; budget constraints (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormoor:v:46:y:2021:i:3:p:835-855

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