TY - GEN
T1 - VCG-Kelly mechanisms for allocation of divisible goods
T2 - 2006 40th Annual Conference on Information Sciences and Systems, CISS 2006
AU - Yang, Sichao
AU - Hajek, Bruce
PY - 2006
Y1 - 2006
N2 - The well known Vickrey-Clark-Groves (VCG) mechanism provides socially optimal solutions for many allocation problems with strategic buyers, but for divisible goods the bids are infinite dimensional. F.P. Kelly and his co-workers developed an allocation mechanism based on one dimensional bids, which is socially optimal if the buyers are price-takers. The idea is that the one-dimensional bid from a buyer specifies a surrogate valuation function. We propose the VCG-Kelly mechanism, which is obtained by composing the one-dimensional signaling idea of Kelly with the VCG mechanism, providing socially optimal allocation for strategic buyers at the Nash equilibrium point. The VCG-Kelly mechanism is studied in the case of a network rate allocation problem, and it applies to several others. It is shown how the revenue to the seller can be maximized or minimized using a particular one-dimensional family of functions. The Nash equilibrium point of the mechanism is shown to be globally stable.
AB - The well known Vickrey-Clark-Groves (VCG) mechanism provides socially optimal solutions for many allocation problems with strategic buyers, but for divisible goods the bids are infinite dimensional. F.P. Kelly and his co-workers developed an allocation mechanism based on one dimensional bids, which is socially optimal if the buyers are price-takers. The idea is that the one-dimensional bid from a buyer specifies a surrogate valuation function. We propose the VCG-Kelly mechanism, which is obtained by composing the one-dimensional signaling idea of Kelly with the VCG mechanism, providing socially optimal allocation for strategic buyers at the Nash equilibrium point. The VCG-Kelly mechanism is studied in the case of a network rate allocation problem, and it applies to several others. It is shown how the revenue to the seller can be maximized or minimized using a particular one-dimensional family of functions. The Nash equilibrium point of the mechanism is shown to be globally stable.
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U2 - 10.1109/CISS.2006.286682
DO - 10.1109/CISS.2006.286682
M3 - Conference contribution
AN - SCOPUS:44049098884
SN - 1424403502
SN - 9781424403509
T3 - 2006 IEEE Conference on Information Sciences and Systems, CISS 2006 - Proceedings
SP - 1391
EP - 1396
BT - 2006 IEEE Conference on Information Sciences and Systems, CISS 2006 - Proceedings
PB - Institute of Electrical and Electronics Engineers Inc.
Y2 - 22 March 2006 through 24 March 2006
ER -