Frugal path mechanisms

We consider the problem of selecting a low cost s --- t path in a graph, where the edge costs are a secret known only to the various economic agents who own them. To solve this problem, Nisan and Ronen applied the celebrated Vickrey-Clarke-Groves (VCG) mechanism, which pays a premium to induce edges to reveal their costs truthfully. We observe that this premium can be unacceptably high. There are simple instances where the mechanism pays Θ(k) times the actual cost of the path, even if there is alternate path available that costs only (1 + ε) times as much. This inspires the frugal path problem, which is to design a mechanism that selects a path and induces truthful cost revelation without paying such a high premium.This paper contributes negative results on the frugal path problem. On two large classes of graphs, including ones having three node-disjoint s - t paths, we prove that no reasonable mechanism can always avoid paying a high premium to induce truthtelling. In particular, we introduce a general class of min function mechanisms, and show that all min function mechanisms can be forced to overpay just as badly VCG. On the other hand, we prove that (on two large classes of graphs) every truthful mechanism satisfying some reasonable properties is a min function mechanism.

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