Credibility Trilemma in Polymatroidal Service Markets

Lauri Lov\'en, Sujit Gujar, Kalle Timperi, Hassan Mehmood, Praveen Kumar Donta, Sasu Tarkoma and Schahram Dustdar

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Abstract: Mechanism-mediated service markets with polymatroidal feasibility admit efficient, dominant-strategy incentive-compatible (DSIC) allocation, but these guarantees implicitly assume truthful execution by the marketplace operator. Modelling the operator as a strategic player, we establish a credibility trilemma: for single-parameter agents on a non-modular polymatroid carrying a competitive prior profile, no static sealed-bid mechanism is simultaneously revenue-optimal, DSIC for agents, and credible for the operator. We introduce the Cost of Non-Credibility (CoNC) as a price-of-anarchy-style welfare-loss measure and prove a per-triple lower bound scaling with the polymatroid's conditional non-modularity gap; on released instances where capacity binds, its deviation extracts under 0.02% of welfare and phantom insertion 0.9-2.2%, neither destroying welfare. Two resolutions follow: public broadcast or deferred-revelation commitment, and administrative domain separation under settlement separation and four side conditions. On the supply side, an integrator paid a share of its slice's payments can profitably understate capacity, which settlement separation does not prevent and a known-cost envelope rule does. An instance-level grounding over the edge-pricing market of Amin et al. proves the trilemma there and shows that settlement separation closes its price-perturbation channel. Marketplace neutrality is thus a first-order design constraint on polymatroidal service markets.

Date: 2026-05, Revised 2026-10
New Economics Papers: this item is included in nep-des
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