payment rule
Mechanism Design for LLM Fine-tuning with Multiple Reward Models
Fine-tuning large language models (LLMs) to aggregate multiple preferences has attracted considerable research attention. With aggregation algorithms advancing, a potential economic scenario arises where fine-tuning services are provided to agents with different preferences. In this context, agents may benefit from strategically misreporting their preferences, but this could harm the aggregation performance. This paper addresses such incentive issues by framing it as a mechanism design problem: an LLM provider determines the fine-tuning objective (training rule) and the pricing scheme (payment rule) for agents. We primarily focus on training rules that maximize social welfare subject to certain regularizations, referred to as SW-Max rules.
A Bandit Framework for Strategic Regression
We consider a learner's problem of acquiring data dynamically for training a regression model, where the training data are collected from strategic data sources. A fundamental challenge is to incentivize data holders to exert effort to improve the quality of their reported data, despite that the quality is not directly verifiable by the learner. In this work, we study a dynamic data acquisition process where data holders can contribute multiple times.
Overcoming the Incentive Collapse Paradox
Yin, Qichuan, Su, Ziwei, Li, Shuangning
AI-assisted task delegation is increasingly common, yet human effort in such systems is costly and typically unobserved. Recent work by Bastani and Cachon (2025); Sambasivan et al. (2021) shows that accuracy-based payment schemes suffer from incentive collapse: as AI accuracy improves, sustaining positive human effort requires unbounded payments. We study this problem in a budget-constrained principal-agent framework with strategic human agents whose output accuracy depends on unobserved effort. We propose a sentinel-auditing payment mechanism that enforces a strictly positive and controllable level of human effort at finite cost, independent of AI accuracy. Building on this incentive-robust foundation, we develop an incentive-aware active statistical inference framework that jointly optimizes (i) the auditing rate and (ii) active sampling and budget allocation across tasks of varying difficulty to minimize the final statistical loss under a single budget. Experiments demonstrate improved cost-error tradeoffs relative to standard active learning and auditing-only baselines.
Do Data Valuations Make Good Data Prices?
Fan, Dongyang, Rotello, Tyler J., Karimireddy, Sai Praneeth
As large language models increasingly rely on external data sources, compensating data contributors has become a central concern. But how should these payments be devised? We revisit data valuations from a $\textit{market-design perspective}$ where payments serve to compensate data owners for the $\textit{private}$ heterogeneous costs they incur for collecting and sharing data. We show that popular valuation methods-such as Leave-One-Out and Data Shapley-make for poor payments. They fail to ensure truthful reporting of the costs, leading to $\textit{inefficient market}$ outcomes. To address this, we adapt well-established payment rules from mechanism design, namely Myerson and Vickrey-Clarke-Groves (VCG), to the data market setting. We show that Myerson payment is the minimal truthful mechanism, optimal from the buyer's perspective. Additionally, we identify a condition under which both data buyers and sellers are utility-satisfied, and the market achieves efficiency. Our findings highlight the importance of incorporating incentive compatibility into data valuation design, paving the way for more robust and efficient data markets. Our data market framework is readily applicable to real-world scenarios. We illustrate this with simulations of contributor compensation in an LLM based retrieval-augmented generation (RAG) marketplace tasked with challenging medical question answering.
Strategyproofness and Monotone Allocation of Auction in Social Networks
Guo, Yuhang, Hao, Dong, Li, Bin, Xiao, Mingyu, Khoussainov, Bakh
Strategyproofness in network auctions requires that bidders not only report their valuations truthfully, but also do their best to invite neighbours from the social network. In contrast to canonical auctions, where the value-monotone allocation in Myerson's Lemma is a cornerstone, a general principle of allocation rules for strategyproof network auctions is still missing. We show that, due to the absence of such a principle, even extensions to multi-unit network auctions with single-unit demand present unexpected difficulties, and all pioneering researches fail to be strategyproof. For the first time in this field, we identify two categories of monotone allocation rules on networks: Invitation-Depressed Monotonicity (ID-MON) and Invitation-Promoted Monotonicity (IP-MON). They encompass all existing allocation rules of network auctions as specific instances. For any given ID-MON or IP-MON allocation rule, we characterize the existence and sufficient conditions for the strategyproof payment rules, and show that among all such payment rules, the revenue-maximizing one exists and is computationally feasible. With these results, the obstacle of combinatorial network auction with single-minded bidders is now resolved.
Reviews: A Bandit Framework for Strategic Regression
The question studied in the paper is interesting, and borrowing the idea from peer prediction to use the other arms' predictions as an unbiased estimator of the quality of one arm's prediction is a nice idea (in particular, because those arms need to be incentivized enough to make reasonably accurate predictions). However, the paper focuses too much on presenting "bells and whistles" rather than giving a deeper understanding of the basic (and main) results. Perhaps reorganizing the paper to only briefly mention the computational/privacy aware variants and giving both more intuition and technical content describing the main result (namely, that there exist \alpha-BNE with small regret) would focus the paper and give the reader a cleaner message of what the paper is doing. This tact would have the added benefit that the reader might be able to better assess the "quantitative" consequences of this work, in that it would leave more room for the authors to ruminate on how much better or worse these bounds are than what one could get in the non-strategic setting, or in various trivial simplifications/special cases of this model. As the paper stands, this reviewer finds it difficult to assess from the main body of the paper alone the technical contribution of the paper (and whether the results follow from a mild reworking of standard proofs or need substantial, new ideas). It is also difficult to assess a theory paper which gives not even a sketch or an outline of a proof in the main body of the paper.
A Bandit Framework for Strategic Regression
We consider a learner's problem of acquiring data dynamically for training a regression model, where the training data are collected from strategic data sources. A fundamental challenge is to incentivize data holders to exert effort to improve the quality of their reported data, despite that the quality is not directly verifiable by the learner. In this work, we study a dynamic data acquisition process where data holders can contribute multiple times.
Deep Learning Meets Mechanism Design: Key Results and Some Novel Applications
Sankar, V. Udaya, Rao, Vishisht Srihari, Narahari, Y.
Mechanism design is essentially reverse engineering of games and involves inducing a game among strategic agents in a way that the induced game satisfies a set of desired properties in an equilibrium of the game. Desirable properties for a mechanism include incentive compatibility, individual rationality, welfare maximisation, revenue maximisation (or cost minimisation), fairness of allocation, etc. It is known from mechanism design theory that only certain strict subsets of these properties can be simultaneously satisfied exactly by any given mechanism. Often, the mechanisms required by real-world applications may need a subset of these properties that are theoretically impossible to be simultaneously satisfied. In such cases, a prominent recent approach is to use a deep learning based approach to learn a mechanism that approximately satisfies the required properties by minimizing a suitably defined loss function. In this paper, we present, from relevant literature, technical details of using a deep learning approach for mechanism design and provide an overview of key results in this topic. We demonstrate the power of this approach for three illustrative case studies: (a) efficient energy management in a vehicular network (b) resource allocation in a mobile network (c) designing a volume discount procurement auction for agricultural inputs. Section 6 concludes the paper.
Exploring Leximin Principle for Fair Core-Selecting Combinatorial Auctions: Payment Rule Design and Implementation
Cheng, Hao, Kong, Shufeng, Deng, Yanchen, Liu, Caihua, Wu, Xiaohu, An, Bo, Wang, Chongjun
Core-selecting combinatorial auctions (CAs) restrict the auction result in the core such that no coalitions could improve their utilities by engaging in collusion. The minimum-revenue-core (MRC) rule is a widely used core-selecting payment rule to maximize the total utilities of all bidders. However, the MRC rule can suffer from severe unfairness since it ignores individuals' utilities. To address this limitation, we propose to explore the leximin principle to achieve fairness in core-selecting CAs since the leximin principle prefers to maximize the utility of the worst-off; the resulting bidder-leximin-optimal (BLO) payment rule is then theoretically analyzed and an effective algorithm is further provided to compute the BLO outcome. Moreover, we conduct extensive experiments to show that our algorithm returns fairer utility distributions and is faster than existing algorithms of core-selecting payment rules.