UNET Seminar: Bhaskar Dutta (University of Warwick)

Title:  Peer selection in a Network: A Mechanism Design Approach

Abstract: A planner wants to select one agent out of n agents on the basis of a binary characteristic that is commonly known to all agents but is not
observed by the planner. Any pair of agents can either be friends or enemies or impartials of each other. An individual’s most preferred outcome is
that she be selected. If she is not selected, then she would prefer that a friend be selected, and if neither she herself or a friend is selected, then
she would prefer that an impartial agent be selected. Finally, her least preferred outcome is that an enemy be selected. The planner wants to
design a dominant strategy incentive compatible mechanism in order to be able choose a desirable agent. We derive sufficient conditions for existence
of efficient and DSIC mechanisms when the planner knows the bilateral relationships between agents. We also show that if the planner does not
know the network these relationships, then there is no efficient and DSIC mechanism and we compare the relative efficiency of two “second-best”
DSIC mechanisms. Finally, we obtain sharp characterization results when the network of friends and enemies satisfies structural balance.