Optimal decision-making with minimal waste: strategyproof redistribution of VCG payments

Mechanisms for coordinating group decision-making among self-interested agents often employ a trusted center, capable of enforcing the prescribed outcome. Typically such mechanisms, including the ubiquitous Vickrey Clarke Groves (VCG), require significant transfer payments from agents to the center. While this is sought after in some settings, it is often an unwanted cost of implementation. We propose a modification of the VCG framework that---by using domain information regarding agent valuation spaces---is often able to achieve redistribution of much of the required transfer payments back among the agents, thus coming closer to budget-balance. The proposed mechanism is strategyproof, ex post individual rational, no-deficit, and leads to an efficient outcome; we prove that among all mechanisms with these qualities and an anonymity property it is optimally balanced, in that no mechanism ever yields greater payoff to the agents. We provide a general characterization of when strategyproof redistribution is possible, and demonstrate specifically that substantial redistribution can be achieved in allocation problems.