Designing budget-balanced best-response mechanisms for network coordination games

Network coordination games (NCGs) have recently received a lot of attention since they model several kinds of interaction problems in social networks. However, the performance of these games at equilibrium may be very bad. This motivates the adoption of mechanisms for inducing a socially optimal state. Many settings are naturally dynamical and thus we believe it is worth to consider the design of incentive compatible best-response mechanisms (Nisan, Schapira, Valiant, Zohar, 2011) for NCGs. Specifically, we would like to assign to players special fees in order to induce the optimum profile of an NCG. Moreover, we would like the mechanism to be budget-balanced, i.e., implementable with no cost. We show that a budget-balanced and incentive compatible best-response mechanism for inducing the optimal profile of a two-strategy NCG always exists. Moreover, for such a mechanism, we investigate other properties inspired by envy-freeness, collusion-resistance and fairness. © Springer-Verlag 2013.