Redistribution Mechanism Design on Networks

Redistribution mechanisms have been proposed for more efficient resource allocation but not for profit. We consider redistribution mechanism design for the first time in a setting where participants are connected and the resource owner is only aware of her neighbours. In this setting, to make the resource allocation more efficient, the resource owner has to inform the others who are not her neighbours, but her neighbours do not want more participants to compete with them. Hence, the goal is to design a redistribution mechanism such that participants are incentivized to invite more participants and the resource owner does not earn or lose much money from the allocation. We first show that existing redistribution mechanisms cannot be directly applied in the network setting to achieve the goal. Then we propose a novel network-based redistribution mechanism such that all participants in the network are invited, the allocation is more efficient and the resource owner has no deficit. Introduction The problem of resource allocation has recently caught the public imagination, where the resource owner has to decide the allocation of the item among a group of self-interested agents. Since the valuation differs from agents, it is a natural objective for the owner to pursue the efficiency of the allocation, i.e., allocating the item to the agent with the highest valuation. In many scenarios, the owner does not really aim at making profits but hopes the wealth maintained among the agents. For example, the government wants to build a library in a community that values it most; a charity distributes a donation to the recipient who needs it most; a hospital allocates doctors to rural areas where doctors are highly demanded. To find the agent with the highest valuation, one common alternative is to hold an auction (Krishna 2009) under some protocols such as the well-known Vickrey-Clarke- Groves (VCG) mechanism (Vickrey 1961; Clarke 1971; Groves 1973). However, the payments under VCG will all be delivered to the auctioneer, which againsts our nonprofit purpose.