How a system designer chooses allocation rules and payments so that self-interested agents holding private information voluntarily report it truthfully and settle on the system-wide efficient outcome. Covers the mechanism as a social-choice function plus payment vector, the revelation principle, and the Vickrey-Clarke-Groves and AGV mechanisms with their efficiency, truthfulness, participation and budget-balance properties. Shows how communication networks, electricity markets, congestion-priced road networks and security-investment problems are each posed as an incentive design and preference elicitation problem.
This arXiv tutorial paper by Chremos and Malikopoulos (submitted December 2022) provides a comprehensive introduction to mechanism design theory for control engineers and theorists. The paper begins …