Roberts Theorem with Neutrality. A Social Welfare Ordering Approach

Transcription

1 : A Approach Indian Statistical Institute (ISI) joint work with Arunava Sen, ISI

2 Introduction The Problem Reformulating the Problem Main Result Objectives of this research Characterize (dominant strategy) implementable social choice functions in quasi-linear environments when agents have multidimensional types. Restricted domains. Motivations Auctioning multiple objects. Choosing a public facility for a city from various possibilities - opera house, park, school, museum etc.

3 Introduction The Problem Reformulating the Problem Main Result Objectives of this research Characterize (dominant strategy) implementable social choice functions in quasi-linear environments when agents have multidimensional types. Restricted domains. Motivations Auctioning multiple objects. Choosing a public facility for a city from various possibilities - opera house, park, school, museum etc.

4 Basic Notation The Problem Reformulating the Problem Main Result Finite set of m alternatives: A = {a,b,c,...}. Assume m 3. Set of agents N = {1,2,...,n}. Type (private information) of agent i: t i = (ti a,tb i,...,) - a vector in R m. Type profile of agents: t (n m matrix) - n vectors in R m. The column vector t a is called the utility vector for alternative a.

5 The Problem Reformulating the Problem Main Result The Domain - m-dimensional Open Interval We assume that the type of agent i lies in T i = (α i,β i ) m, where α i R { } and β i R { }. This implies that the domain of type profile of agents is T n = i N T i = i N (α i,β i ) m R m n. Let D R n be the set of all possible utility vectors for any allocation - note that it is an open rectangle in R n. If T i = R m for all i (or equivalently, D = R n ), we call it the unrestricted domain.

6 An Illustration The Problem Reformulating the Problem Main Result Agent 2 - (1,3) m Domain of utility vectors: D (1,3) (1,1) a c b (4,3) (4,1) Agent 1 - (1,4) m

7 Dominant Strategy Implementation The Problem Reformulating the Problem Main Result A social choice function (SCF) is a mapping f : T n A. A payment function (of agent i) is a mapping p i : T n R, where p i (t) denotes the payment of agent i at t T n. Definition A social choice function f is implementable if there exists payment functions (p 1,...,p n ) such that for all i N and for all t i T i t f (t) i + p i (t) t f (s i,t i ) i + p i (s i,t i ) s i,t i T i. What social choice functions are implementable?

8 Dominant Strategy Implementation The Problem Reformulating the Problem Main Result A social choice function (SCF) is a mapping f : T n A. A payment function (of agent i) is a mapping p i : T n R, where p i (t) denotes the payment of agent i at t T n. Definition A social choice function f is implementable if there exists payment functions (p 1,...,p n ) such that for all i N and for all t i T i t f (t) i + p i (t) t f (s i,t i ) i + p i (s i,t i ) s i,t i T i. What social choice functions are implementable?

9 Monotonicity Characterizations The Problem Reformulating the Problem Main Result Rochet (1987, J. Math. Econ.) gave a characterization in terms of cycle monotonicity - works in any domain. Bikhchandani et al. (2006, Econometrica) gave a characterization in terms of a weak monotonicity (2-cycle monotonicity) - works in convex domains (auction domains are covered). Monotonicity characterizations do not say much about the functional form of the implementable SCF.

10 A Property of Implementable SCFs The Problem Reformulating the Problem Main Result Definition A social choice function f satisfies positive association of differences (PAD) if for every s,t T n such that f (t) = a with s a t a s b t b for all b a, we have f (s) = a. Lemma (Roberts, 1979, Book Chapter) Every implementable social choice function satisfies PAD. Weak monotonicity implies PAD - but the converse is not true in general. In auction domains, every SCF satisfies PAD - so PAD does not imply implementability in restricted domains.

11 Roberts Theorem - Affine Maximizers The Problem Reformulating the Problem Main Result Definition A social choice function f satisfies non-imposition if for every a A, there exists t T n such that f (t) = a. Theorem (Roberts, 1979, Book Chapter) Suppose D = R n (unrestricted domain). If f is an implementable social choice function which satisfies non-imposition, then there exists weights λ R n + \ {0} and a deterministic real-valued function κ : A R such that for all t T n, [ f (t) arg max λ i ti a κ(a) ] a A i N

12 The Problem Reformulating the Problem Main Result Payment Functions - Generalized Groves Payments If f is an affine maximizer (λ,κ), then consider the payment rule p as follows. For every i N and every t T n, if λ i = 0 then p i (t) = 0, else, p i (t) = h i (t i ) 1 λ i [ j i λ j t f (t) i + κ(f (t)) ], where h i : T i R is any arbitrary function.

13 Main Open Question The Problem Reformulating the Problem Main Result Under what subdomains can one derive a functional form of implementable social choice functions?

14 The Problem Reformulating the Problem Main Result Non-Affine Maximizers in Bounded Domains Let N = {1,2} and A = {a,b,c}. Suppose T 1 = T 2 = (0,1) 3 (alternatively, suppose D = (0,1) 2 ). Consider the following allocation rule f. Let T g = {(t 1,t 2 ) T 2 : t c 1 < tb } {(t 1,t 2 ) T 2 : t c 2 > tb 2 0.5}. Then, { arg max{ t a f (t 1,t 2 ) = 1 + t2 a,tb 1 + tb 2,tc 1 + tc 2 } (t 1,t 2 ) T g c otherwise. f satisfies non-imposition and is implementable but not an affine maximizer.

15 The Problem Reformulating the Problem Main Result Neutrality and Weighted Welfare Maximizers Definition A social choice function f is neutral if for every type profile t T n and for all permutations on A such that t s, where s is the type profile due to permutation, we have (f (t)) = f (s). Neutrality implies non-imposition. Theorem (Roberts, 1979, Book Chapter) Suppose T i = R m for all i N (unrestricted domain). If f is an implementable and neutral social choice function, then there exists weights λ R n + \ {0} such that for all t Tn, f (t) arg max a A [ λ i ti a ] i N

16 New Open Question The Problem Reformulating the Problem Main Result Under what subdomains does Roberts theorem with neutrality hold?

17 Our Answer The Problem Reformulating the Problem Main Result Theorem Suppose T i is an m-dimensional open interval and f is a neutral social choice function. The SCF f is implementable if and only if there exists weights λ R n + \ {0} such that for all t T n, f (t) arg max a A [ λ i ti a ] i N

18 A Plausible Conjecture is False The Problem Reformulating the Problem Main Result Every domain where every neutral and implementable SCF is a weighted welfare maximizer is also a domain where every implementable SCF is an affine maximizer. This is false - earlier example and our result.

19 A Plausible Conjecture is False The Problem Reformulating the Problem Main Result Every domain where every neutral and implementable SCF is a weighted welfare maximizer is also a domain where every implementable SCF is an affine maximizer. This is false - earlier example and our result.

20 Auction Domains not Covered The Problem Reformulating the Problem Main Result Our results do not apply to auction domains because of many reasons: Auction domains are not open - not even full-dimensional. Neutrality is not appropriate in auction domains.

21 A Possible Application The Problem Reformulating the Problem Main Result A city plans to choose one of the public facilities from a finite set of possibilities (building a park, opera house, or museum). The city planner is neutral about the project to choose. Each agent (citizen) has value for each project, which may respect our domain assumption.

22 A Approach Step 1 Every implementable and neutral SCF induces an ordering on D. Step 2 This ordering satisfies three axioms: weak Pareto, invariance, and continuity. Step 3 Every ordering which satisfies these axioms can be represented as weighted welfare maximizers.

23 Illustration of the Approach Agent 2 - (1,3) m Domain of utility vectors: D a c b Agent 1 - (1,4) m

24 Illustration of the Approach Agent 2 - (1,3) m Domain of utility vectors: D a c b Agent 1 - (1,4) m

25 Illustration of the Approach Agent 2 - (1,3) m Domain of utility vectors: D a c b Agent 1 - (1,4) m

26 Illustration of the Approach Agent 2 - (1,3) m Domain of utility vectors: D Neutral SCF: λ 1 = 1,λ 2 = 2 a c b Agent 1 - (1,4) m

27 Final Comments Using the proof with neutrality, we prove the general (affine maximizer) version of Roberts theorem. Main idea: to generate from any SCF a new SCF which is neutral. Anonymity gives efficiency.

28 Many Proofs of Roberts Theorem (for Unrestricted Domains) Roberts original proof (Roberts, 1979, Book Chapter). Lavi, Mualem, Nisan (2009, Soc. Cho. Welfare; 2003 Conference Paper) - similar to but simpler than Roberts original proof. Dobzinski and Nisan (2009 Conference Paper) - in the spirit of Barbera and Peleg s proof of Gibbard-Satterthwaite Theorem. Vohra (2008, Mimeo) - similar to Roberts original proof. Jehiel, Meyer-ter-Vehn, and Moldovanu (2008, Econ. Theory) - for interdependent values model. Carbajal and Tourky (2009, Mimeo) - for arbitrary continuous value functions.

29 Explaining Step 1 Step 1 Every implementable and neutral SCF induces an ordering on D. Step 2 This ordering satisfies three axioms: weak Pareto, invariance, and continuity. Step 3 Every ordering which satisfies these axioms can be represented as weighted welfare maximizers.

30 A Choice Set Definition The choice set of an SCF f at every type profile t is C f (t) = {a A : ε 0,f (t a + ε,t a ) = a}. Lemma If f is implementable and D is open from above, then for all type profiles t, f (t) C f (t).

31 Definition A social welfare ordering (SWO) R f induced by a social choice function f is a binary relation on D defined as follows. The symmetric component of R f is denoted by I f and the antisymmetric component of R f is denoted by P f. Pick x,y D. We say xp f y if and only if there exists a profile t with t a = x and t b = y for some a,b A such that a C f (t) but b / C f (t). We say xi f y if and only if there exists a profile t with t a = x and t b = y for some a,b A such that a,b C f (t).

32 R f is an Ordering Proposition Suppose f is an implementable and neutral social choice function and D is open from above and a meet semi-lattice. Then, R f induced by f on D is an ordering.

33 Explaining Step 2 Step 1 Every implementable and neutral SCF induces an ordering on D. Step 2 This ordering satisfies three axioms: weak Pareto, invariance, and continuity. Step 3 Every ordering which satisfies these axioms can be represented as weighted welfare maximizers.

34 Three Axioms for an Ordering Definition An ordering R on D satisfies weak Pareto (WP) if for all x,y D with x y we have xpy. Definition An ordering R on D satisfies invariance (INV) if for all x,y D and all z R n such that (x + z),(y + z) D we have xpy implies (x + z)p(y + z) and xiy implies (x + z)i(y + z). Definition An ordering R on D satisfies continuity (C) if for all x D, the sets U x = {y D : yrx} and L x = {y D : xry} are closed in R n.

35 Three Axioms for an Ordering Definition An ordering R on D satisfies weak Pareto (WP) if for all x,y D with x y we have xpy. Definition An ordering R on D satisfies invariance (INV) if for all x,y D and all z R n such that (x + z),(y + z) D we have xpy implies (x + z)p(y + z) and xiy implies (x + z)i(y + z). Definition An ordering R on D satisfies continuity (C) if for all x D, the sets U x = {y D : yrx} and L x = {y D : xry} are closed in R n.

36 Three Axioms for an Ordering Definition An ordering R on D satisfies weak Pareto (WP) if for all x,y D with x y we have xpy. Definition An ordering R on D satisfies invariance (INV) if for all x,y D and all z R n such that (x + z),(y + z) D we have xpy implies (x + z)p(y + z) and xiy implies (x + z)i(y + z). Definition An ordering R on D satisfies continuity (C) if for all x D, the sets U x = {y D : yrx} and L x = {y D : xry} are closed in R n.

37 An SWO Satisfies these Axioms Proposition Suppose f is an implementable and neutral social choice function and D is open from above and a meet semi-lattice. Then the social welfare ordering R f induced by f on D satisfies weak Pareto, invariance, and continuity.

38 Explaining Step 3 Step 1 Every implementable and neutral SCF induces an ordering on D. Step 2 This ordering satisfies three axioms: weak Pareto, invariance, and continuity. Step 3 Every ordering which satisfies these axioms can be represented as weighted welfare maximizers.

39 Characterizing the Ordering Suppose an ordering on D satisfies WP, INV, and C. Can we say anything about the ordering? When D = R n, there is ample literature - see d Aspremont and Gevers (2002, Book Chapter). Proposition (Blackwell and Girshick (1954, Book)) Suppose an ordering R on R n satisfies weak Pareto, invariance, and continuity. Then there exists weights λ R n + \ {0} and for all x,y R n xry i N λ i x i i N λ i y i.

40 Characterizing the Ordering Suppose an ordering on D satisfies WP, INV, and C. Can we say anything about the ordering? When D = R n, there is ample literature - see d Aspremont and Gevers (2002, Book Chapter). Proposition (Blackwell and Girshick (1954, Book)) Suppose an ordering R on R n satisfies weak Pareto, invariance, and continuity. Then there exists weights λ R n + \ {0} and for all x,y R n xry i N λ i x i i N λ i y i.

41 Our Ordering Characterization in Restricted Domains Proposition Suppose D is open and convex and let R be an ordering on D which satisfies weak Pareto, invariance, and continuity. Then there exists weights λ R n + \ {0} and for all x,y D xry i N λ i x i i N λ i y i.