Algorithmic Mechanism Design and Blockchain Technology
Mechanism Design and Algorithmic Mechanism Design
Mechanism Design is a subfield of game theory which aims to
- design games whose equlibria have desired properties.
- design economic institutions as to achieve various economic goals (revenue and social welfare).
Mechanism Design was initiated by the Seminal work of Nobel Prize Winner Vickery.
Setting
Mechanism Designs considers a set of rational players. A Social Outcome that affects all the players needs to be chosen by the
planner (mechanism designer) who does not have the full information (information needed for determing the preferred social outcome).
Algorithmic Mechanism Design is a subfield of Mechanism Design and Computer Science which deals with
- Mechanism Design in algorithmically-complex scenarios.
Setting
Computer Science there is no utilities. A problem only defines the input and output relationship. Goal is always to produce the correct output for every given input (efficiently). Efficiency here measured in terms of computational resources (time, memory, communication).
In a distributed computer settings, the essence of the computers are simply tring to further the goals of their owners. Mechanism design was embraced as a paradigm for the design of distributed computational protocols over the Internet.
Background
- Economic Activities were moving towards Internet.
- Computational Systems started involving computers with different owners and goals.
A field of study for handling combinations of computerized and economic considerations was born.
CORE
- We can say that a problem is part of Algorithmic Mechanism Design whenever we have an economic design challenge where a central essence of the problem is the multitude of input pieces or outcome possibilities.
- Auctioning a single item is the paradigmatic problem of Mechanism Design, auctioning multiple (related) items would be the paradigmatic problem of Algorithmic Mechanism Design.
Choices
- Private Values: Recent Algorithmic Mechanism Design considers situations where bidders have parital knowledge about their values.
- Quasi-linear Utilities: Bidders’ values can be measured in monetary units (money) that can be transferred to and from the auctioneer.
- Risk Neutrality: All Participants have Neutral Risk.
- Central Goals: Revenue and Efficiency
- Dominant Strategy Analysis: Standard way of modeling lack of information in economics is using Bayesian. In computer science, we standard approach is worst-case analysis.
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