Vincent Conitzer, Christian Kroer, Debmalya Panigrahi, Okke Schrijvers, Eric Sodomka, N. Stier-Moses, Christopher A. Wilkens
In the isolated auction of a single item, second price is often preferable to first price in properties of theoretical interest. Unfortunately, single items are rarely sold in true isolation, so considering the broader context is critical when adopting a pricing strategy. In this paper, we show that this context is important in a model centrally relevant to Internet advertising: when items (ad impressions) are individually auctioned within the context of a larger system that is managing budgets, theory offers surprising support for using a first price auction to sell each individual item. In particular, first price auctions offer theoretical guarantees of equilibrium uniqueness, monotonicity, and other desirable properties, as well as efficient computability as the solution to the well-studied Eisenberg-Gale convex program. We also use simulations to demonstrate that while there are incentives to misreport in thin markets (where budgets aren't constraining), a bidder's incentive to deviate vanishes in thick markets.
{"title":"Pacing Equilibrium in First-Price Auction Markets","authors":"Vincent Conitzer, Christian Kroer, Debmalya Panigrahi, Okke Schrijvers, Eric Sodomka, N. Stier-Moses, Christopher A. Wilkens","doi":"10.1145/3328526.3329600","DOIUrl":"https://doi.org/10.1145/3328526.3329600","url":null,"abstract":"In the isolated auction of a single item, second price is often preferable to first price in properties of theoretical interest. Unfortunately, single items are rarely sold in true isolation, so considering the broader context is critical when adopting a pricing strategy. In this paper, we show that this context is important in a model centrally relevant to Internet advertising: when items (ad impressions) are individually auctioned within the context of a larger system that is managing budgets, theory offers surprising support for using a first price auction to sell each individual item. In particular, first price auctions offer theoretical guarantees of equilibrium uniqueness, monotonicity, and other desirable properties, as well as efficient computability as the solution to the well-studied Eisenberg-Gale convex program. We also use simulations to demonstrate that while there are incentives to misreport in thin markets (where budgets aren't constraining), a bidder's incentive to deviate vanishes in thick markets.","PeriodicalId":416173,"journal":{"name":"Proceedings of the 2019 ACM Conference on Economics and Computation","volume":"45 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-11-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132634864","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
L. Bartholdi, Wade Hann-Caruthers, Maya Josyula, O. Tamuz, Leeat Yariv
A celebrated result in social choice is May's Theorem (1952), providing the foundation for majority rule. May's crucial assumption of symmetry, often thought of as a procedural equity requirement, is violated by many choice procedures that grant voters identical roles. We show that a modification of May's symmetry assumption allows for a far richer set of rules that still treat voters equally, but have minimal winning coalitions comprising a vanishing fraction of the population. We conclude that procedural fairness can coexist with the empowerment of a small minority of individuals. Methodologically, we introduce techniques from discrete mathematics and illustrate their usefulness for the analysis of social choice questions.
{"title":"Equitable Voting Rules","authors":"L. Bartholdi, Wade Hann-Caruthers, Maya Josyula, O. Tamuz, Leeat Yariv","doi":"10.2139/ssrn.3277806","DOIUrl":"https://doi.org/10.2139/ssrn.3277806","url":null,"abstract":"A celebrated result in social choice is May's Theorem (1952), providing the foundation for majority rule. May's crucial assumption of symmetry, often thought of as a procedural equity requirement, is violated by many choice procedures that grant voters identical roles. We show that a modification of May's symmetry assumption allows for a far richer set of rules that still treat voters equally, but have minimal winning coalitions comprising a vanishing fraction of the population. We conclude that procedural fairness can coexist with the empowerment of a small minority of individuals. Methodologically, we introduce techniques from discrete mathematics and illustrate their usefulness for the analysis of social choice questions.","PeriodicalId":416173,"journal":{"name":"Proceedings of the 2019 ACM Conference on Economics and Computation","volume":"96 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116257422","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We consider a social planner faced with a stream of myopic selfish agents. The goal of the social planner is to maximize the social welfare, however, it is limited to using only information asymmetry (regarding previous outcomes) and cannot use any monetary incentives. The planner recommends actions to agents, but her recommendations need to be Bayesian Incentive Compatible to be followed by the agents. Our main result is an optimal algorithm for the planner, in the case that the actions realizations are deterministic and have limited support, making significant important progress on this open problem. Our optimal protocol has two interesting features. First, it always completes the exploration of a priori more beneficial actions before exploring a priori less beneficial actions. Second, the randomization in the protocol is correlated across agents and actions (and not independent at each decision time).
{"title":"Optimal Algorithm for Bayesian Incentive-Compatible Exploration","authors":"Lee Cohen, Y. Mansour","doi":"10.1145/3328526.3329581","DOIUrl":"https://doi.org/10.1145/3328526.3329581","url":null,"abstract":"We consider a social planner faced with a stream of myopic selfish agents. The goal of the social planner is to maximize the social welfare, however, it is limited to using only information asymmetry (regarding previous outcomes) and cannot use any monetary incentives. The planner recommends actions to agents, but her recommendations need to be Bayesian Incentive Compatible to be followed by the agents. Our main result is an optimal algorithm for the planner, in the case that the actions realizations are deterministic and have limited support, making significant important progress on this open problem. Our optimal protocol has two interesting features. First, it always completes the exploration of a priori more beneficial actions before exploring a priori less beneficial actions. Second, the randomization in the protocol is correlated across agents and actions (and not independent at each decision time).","PeriodicalId":416173,"journal":{"name":"Proceedings of the 2019 ACM Conference on Economics and Computation","volume":"45 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-10-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128696788","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Using a lab experiment, we investigate the real-life performance of envy-free and proportional cake-cutting procedures with respect to fairness and preference manipulation. We find that envy-free procedures, in particular Selfridge-Conway, are fairer and also are perceived as fairer than their proportional counterparts, despite the fact that agents very often manipulate them. Our results support the practical use of the celebrated Selfridge-Conway procedure, and more generally, of envy-free cake-cutting mechanisms. We also find that subjects learn their opponents' preferences after repeated interaction and use this knowledge to improve their allocated share of the cake. Learning reduces truth-telling behavior, but also reduces envy.
{"title":"Fair Cake-Cutting in Practice","authors":"M. Kyropoulou, J. Ortega, Erel Segal-Halevi","doi":"10.2139/ssrn.3269482","DOIUrl":"https://doi.org/10.2139/ssrn.3269482","url":null,"abstract":"Using a lab experiment, we investigate the real-life performance of envy-free and proportional cake-cutting procedures with respect to fairness and preference manipulation. We find that envy-free procedures, in particular Selfridge-Conway, are fairer and also are perceived as fairer than their proportional counterparts, despite the fact that agents very often manipulate them. Our results support the practical use of the celebrated Selfridge-Conway procedure, and more generally, of envy-free cake-cutting mechanisms. We also find that subjects learn their opponents' preferences after repeated interaction and use this knowledge to improve their allocated share of the cake. Learning reduces truth-telling behavior, but also reduces envy.","PeriodicalId":416173,"journal":{"name":"Proceedings of the 2019 ACM Conference on Economics and Computation","volume":"34 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-10-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116944221","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The proliferation of data collection and machine learning techniques has created an opportunity for commercialization of private data by data aggregators. In this paper, we study this data monetization problem as a mechanism design problem, specifically using a contract-theoretic approach. Our proposed adversarial contract design framework provides a fundamental extension to the classic contract theory set-up in order to account for the heterogeneity in honest buyers' demands for data, as well as the presence of adversarial buyers who may purchase data to compromise its privacy. We propose the notion of Price of Adversary $(PoAdv)$ to quantify the effects of adversarial users on the data seller's revenue, and provide bounds on the $PoAdv$ for various classes of adversary utility. We also provide a fast approximate technique to compute contracts in the presence of adversaries.
{"title":"Adversarial Contract Design for Private Data Commercialization","authors":"Parinaz Naghizadeh Ardabili, Arunesh Sinha","doi":"10.1145/3328526.3329633","DOIUrl":"https://doi.org/10.1145/3328526.3329633","url":null,"abstract":"The proliferation of data collection and machine learning techniques has created an opportunity for commercialization of private data by data aggregators. In this paper, we study this data monetization problem as a mechanism design problem, specifically using a contract-theoretic approach. Our proposed adversarial contract design framework provides a fundamental extension to the classic contract theory set-up in order to account for the heterogeneity in honest buyers' demands for data, as well as the presence of adversarial buyers who may purchase data to compromise its privacy. We propose the notion of Price of Adversary $(PoAdv)$ to quantify the effects of adversarial users on the data seller's revenue, and provide bounds on the $PoAdv$ for various classes of adversary utility. We also provide a fast approximate technique to compute contracts in the presence of adversaries.","PeriodicalId":416173,"journal":{"name":"Proceedings of the 2019 ACM Conference on Economics and Computation","volume":"27 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-10-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132280131","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Moshe Babaioff, Yannai A. Gonczarowski, Assaf Romm
Who gains and who loses from a manipulable school choice mechanism? We examine this question with a focus on the outcomes for sincere and sophisticated students, and present results concerning their absolute and relative gains under the manipulable Boston Mechanism (BM) as compared with the strategy-proof Deferred Acceptance (DA). The absolute gain of a student of a certain type is the difference between her expected utility under (an equilibrium of) BM and her utility under (the dominant-strategy equilibrium of) DA. Holding everything else constant, one type of a player has relative gain with respect to another type if her absolute gain is higher. Prior theoretical works presented inconclusive results regarding the absolute gains of both types of students, and predicted (or assumed) positive relative gains for sophisticated types compared to sincere types. The empirical evidence is also mixed, with different markets exhibiting very different behaviors. We extend the previous results and explain the inconsistent empirical findings using a large random market approach. We provide robust and generic results of the "anything goes" variety for markets with a coarse priority structure. That is, in such markets there are many sincere and sophisticated students who prefer BM to DA (positive absolute gain), and vice versa (negative absolute gain). Furthermore, some populations may even get a relative gain from being sincere (and being perceived as such). We conclude by studying market forces that can influence the choice between the two mechanisms.
{"title":"Playing on a Level Field: Sincere and Sophisticated Players in the Boston Mechanism with a Coarse Priority Structure","authors":"Moshe Babaioff, Yannai A. Gonczarowski, Assaf Romm","doi":"10.1145/3328526.3329596","DOIUrl":"https://doi.org/10.1145/3328526.3329596","url":null,"abstract":"Who gains and who loses from a manipulable school choice mechanism? We examine this question with a focus on the outcomes for sincere and sophisticated students, and present results concerning their absolute and relative gains under the manipulable Boston Mechanism (BM) as compared with the strategy-proof Deferred Acceptance (DA). The absolute gain of a student of a certain type is the difference between her expected utility under (an equilibrium of) BM and her utility under (the dominant-strategy equilibrium of) DA. Holding everything else constant, one type of a player has relative gain with respect to another type if her absolute gain is higher. Prior theoretical works presented inconclusive results regarding the absolute gains of both types of students, and predicted (or assumed) positive relative gains for sophisticated types compared to sincere types. The empirical evidence is also mixed, with different markets exhibiting very different behaviors. We extend the previous results and explain the inconsistent empirical findings using a large random market approach. We provide robust and generic results of the \"anything goes\" variety for markets with a coarse priority structure. That is, in such markets there are many sincere and sophisticated students who prefer BM to DA (positive absolute gain), and vice versa (negative absolute gain). Furthermore, some populations may even get a relative gain from being sincere (and being perceived as such). We conclude by studying market forces that can influence the choice between the two mechanisms.","PeriodicalId":416173,"journal":{"name":"Proceedings of the 2019 ACM Conference on Economics and Computation","volume":"34 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-10-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126846263","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A mechanism is strategy-proof if agents can never profitably manipulate, in any state of the world; however, not all non-strategy-proof mechanisms are equally easy to manipulate - some are more "obviously'' manipulable than others. We propose a formal definition of an obvious manipulation and argue that it may be advantageous for designers to tolerate some manipulations, so long as they are non-obvious. By doing so, improvements can be achieved on other key dimensions, such as efficiency and fairness, without significantly compromising incentives. We classify common non-strategy-proof mechanisms as either obviously manipulable (OM) or not obviously manipulable (NOM), and show that this distinction is both tractable and in-line with empirical realities regarding the success of manipulable mechanisms in practical market design settings.
{"title":"Obvious Manipulations","authors":"Peter Troyan, T. Morrill","doi":"10.2139/ssrn.3260668","DOIUrl":"https://doi.org/10.2139/ssrn.3260668","url":null,"abstract":"A mechanism is strategy-proof if agents can never profitably manipulate, in any state of the world; however, not all non-strategy-proof mechanisms are equally easy to manipulate - some are more \"obviously'' manipulable than others. We propose a formal definition of an obvious manipulation and argue that it may be advantageous for designers to tolerate some manipulations, so long as they are non-obvious. By doing so, improvements can be achieved on other key dimensions, such as efficiency and fairness, without significantly compromising incentives. We classify common non-strategy-proof mechanisms as either obviously manipulable (OM) or not obviously manipulable (NOM), and show that this distinction is both tractable and in-line with empirical realities regarding the success of manipulable mechanisms in practical market design settings.","PeriodicalId":416173,"journal":{"name":"Proceedings of the 2019 ACM Conference on Economics and Computation","volume":"85 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-10-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125760333","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Jonah Brown-Cohen, Arvind Narayanan, Alexandros Psomas, S. Weinberg
The security of most existing cryptocurrencies is based on a concept called Proof-of-Work, in which users must solve a computationally hard cryptopuzzle to authorize transactions ("one unit of computation, one vote''). This leads to enormous expenditure on hardware and electricity in order to collect the rewards associated with transaction authorization. Proof-of-Stake is an alternative concept that instead selects users to authorize transactions proportional to their wealth ("one coin, one vote"). Some aspects of the two paradigms are the same. For instance, obtaining voting power in Proof-of-Stake has a monetary cost just as in Proof-of-Work: a coin cannot be freely duplicated any more easily than a unit of computation. However some aspects are fundamentally different. In particular, exactly because Proof-of-Stake is wasteless, there is no inherent resource cost to deviating (commonly referred to as the "Nothing-at-Stake'' problem). In contrast to prior work, we focus on incentive-driven deviations (any participant will deviate if doing so yields higher revenue) instead of adversarial corruption (an adversary may take over a significant fraction of the network, but the remaining players follow the protocol). The main results of this paper are several formal barriers to designing incentive-compatible proof-of-stake cryptocurrencies (that don't apply to proof-of-work).
{"title":"Formal Barriers to Longest-Chain Proof-of-Stake Protocols","authors":"Jonah Brown-Cohen, Arvind Narayanan, Alexandros Psomas, S. Weinberg","doi":"10.1145/3328526.3329567","DOIUrl":"https://doi.org/10.1145/3328526.3329567","url":null,"abstract":"The security of most existing cryptocurrencies is based on a concept called Proof-of-Work, in which users must solve a computationally hard cryptopuzzle to authorize transactions (\"one unit of computation, one vote''). This leads to enormous expenditure on hardware and electricity in order to collect the rewards associated with transaction authorization. Proof-of-Stake is an alternative concept that instead selects users to authorize transactions proportional to their wealth (\"one coin, one vote\"). Some aspects of the two paradigms are the same. For instance, obtaining voting power in Proof-of-Stake has a monetary cost just as in Proof-of-Work: a coin cannot be freely duplicated any more easily than a unit of computation. However some aspects are fundamentally different. In particular, exactly because Proof-of-Stake is wasteless, there is no inherent resource cost to deviating (commonly referred to as the \"Nothing-at-Stake'' problem). In contrast to prior work, we focus on incentive-driven deviations (any participant will deviate if doing so yields higher revenue) instead of adversarial corruption (an adversary may take over a significant fraction of the network, but the remaining players follow the protocol). The main results of this paper are several formal barriers to designing incentive-compatible proof-of-stake cryptocurrencies (that don't apply to proof-of-work).","PeriodicalId":416173,"journal":{"name":"Proceedings of the 2019 ACM Conference on Economics and Computation","volume":"3 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-09-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125178743","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Algorithms can be a powerful aid to decision-making - particularly when decisions rely, even implicitly, on predictions [7]. We are already seeing algorithms play this role in domains including hiring, education, lending, medicine, and criminal justice [2, 6, 10]. As is typical in machine learning applications, accuracy is an important measure for these tasks.
{"title":"Simplicity Creates Inequity: Implications for Fairness, Stereotypes, and Interpretability","authors":"J. Kleinberg, S. Mullainathan","doi":"10.1145/3328526.3329621","DOIUrl":"https://doi.org/10.1145/3328526.3329621","url":null,"abstract":"Algorithms can be a powerful aid to decision-making - particularly when decisions rely, even implicitly, on predictions [7]. We are already seeing algorithms play this role in domains including hiring, education, lending, medicine, and criminal justice [2, 6, 10]. As is typical in machine learning applications, accuracy is an important measure for these tasks.","PeriodicalId":416173,"journal":{"name":"Proceedings of the 2019 ACM Conference on Economics and Computation","volume":"287 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-09-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125743353","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study bilateral trading networks with imperfectly transferable utility and frictions. Several structural results for the set of competitive equilibria in trading networks are established: The lattice theorem, the rural hospitals theorem, the existence of side-optimal equilibria, compactness of the set of equilibria and a group-incentive-compatibility result hold without the assumption of quasi-linear utility in transfers. While our results are developed in a trading network model, they also imply analogous (and new) results for exchange economies with combinatorial demand and for two-sided matching markets with transfers.
{"title":"Trading Networks with General Preferences","authors":"Jan Christoph Schlegel","doi":"10.1145/3328526.3329559","DOIUrl":"https://doi.org/10.1145/3328526.3329559","url":null,"abstract":"We study bilateral trading networks with imperfectly transferable utility and frictions. Several structural results for the set of competitive equilibria in trading networks are established: The lattice theorem, the rural hospitals theorem, the existence of side-optimal equilibria, compactness of the set of equilibria and a group-incentive-compatibility result hold without the assumption of quasi-linear utility in transfers. While our results are developed in a trading network model, they also imply analogous (and new) results for exchange economies with combinatorial demand and for two-sided matching markets with transfers.","PeriodicalId":416173,"journal":{"name":"Proceedings of the 2019 ACM Conference on Economics and Computation","volume":"120 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132214498","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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