Beyond Moulin mechanisms

The only known general technique for designing truthful and approximately budget-balanced cost-sharing mechanisms with good efficiency or computational complexity properties is due to Moulin [1999. Incremental cost sharing: Characterization by coalition strategy-proofness. Soc. Choice Welfare 16 (2), 279–320]. For many fundamental cost-sharing applications, however, Moulin mechanisms provably suffer from poor budget-balance, poor economic efficiency, or both.We propose acyclic mechanisms, a new framework for designing truthful and approximately budget-balanced cost-sharing mechanisms. Acyclic mechanisms strictly generalize Moulin mechanisms and offer three important advantages. First, it is easier to design acyclic mechanisms than Moulin mechanisms: many classical primal-dual algorithms naturally induce a non-Moulin acyclic mechanism with good performance guarantees. Second, for important classes of cost-sharing problems, acyclic mechanisms have exponentially better budget-balance and economic efficiency than Moulin mechanisms. Finally, while Moulin mechanisms have found application primarily in binary demand games, we extend acyclic mechanisms to general demand games, a multi-parameter setting in which each bidder can be allocated one of several levels of service.