Mechanism Design for Fair Division
February 20, 2013
We revisit the classic problem of fair division from a mechanism design perspective and provide an elegant truthful mechanism that yields surprisingly good approximation guarantees for the widely used solution of Proportional Fairness. This solution, which is closely related to Nash bargaining and the competitive equilibrium, is known to be not implementable in a truthful fashion, which has been its main drawback. To alleviate this issue, we propose a new mechanism, which we call the Partial Allocation mechanism, that discards a carefully chosen fraction of the allocated resources in order to incentivize the agents to be truthful in reporting their valuations.

For a multi-dimensional domain with an arbitrary number of agents and items, and for the very large class of homogeneous valuation functions, we prove that our mechanism provides every agent with at least a 1/e \approx 0.368 fraction of her Proportionally Fair valuation. To the best of our knowledge, this is the first result that gives a constant factor approximation to every agent for the Proportionally Fair solution. To complement this result, we show that no truthful mechanism can guarantee more than 0.5 approximation, even for the restricted class of additive linear valuations. We also uncover a connection between the Partial Allocation mechanism and VCG-based mechanism design, which introduces a way to implement interesting truthful mechanisms in settings where monetary payments are not an option.

Joint work with Richard Cole and Gagan Goel.