Characterizing truthfulness in discrete domains

Algorithmic mechanism design [9; 10] focuses on the design of algorithms that aim to achieve global objectives in settings in which the "input" is provided by self-interested strategic players2. This necessitates the design of algorithms that are incentive-compatible (a.k.a. truthful 3) in the sense that players are incentivized via payments to behave as instructed. The most natural approach to designing incentive-compatible algorithms is coming up with an algorithm and an explicit payment scheme that guarantees its incentive-compatibility. However, finding appropriate payments is often a difficult, setting-specific, task, which is mostly achievable for very simple types of algorithms.

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