Markets for public decision-making

DOI10.1007/S00355-020-01298-4MaRDI QIDQ2235098zbMATH OpenOpenAlexFDO

Authors Nikhil Garg, Ashish Goel, Benjamin Plaut

Publication date 20 October 2021

Published in Social Choice and Welfare (Search for Journal in Brave)

Full work available at URL https://arxiv.org/abs/1807.10836

zbMATH Keywords

Fisher marketpairwise issue expansionpublic decision-making

Mathematics Subject Classification ID

Decision theory (91B06) Auctions, bargaining, bidding and selling, and other market models (91B26)

Abstract: A public decision-making problem consists of a set of issues, each with multiple possible alternatives, and a set of competing agents, each with a preferred alternative for each issue. We study adaptations of market economies to this setting, focusing on binary issues. Issues have prices, and each agent is endowed with artificial currency that she can use to purchase probability for her preferred alternatives (we allow randomized outcomes). We first show that when each issue has a single price that is common to all agents, market equilibria can be arbitrarily bad. This negative result motivates a different approach. We present a novel technique called "pairwise issue expansion", which transforms any public decision-making instance into an equivalent Fisher market, the simplest type of private goods market. This is done by expanding each issue into many goods: one for each pair of agents who disagree on that issue. We show that the equilibrium prices in the constructed Fisher market yield a "pairwise pricing equilibrium" in the original public decision-making problem which maximizes Nash welfare. More broadly, pairwise issue expansion uncovers a powerful connection between the public decision-making and private goods settings; this immediately yields several interesting results about public decisions markets, and furthers the hope that we will be able to find a simple iterative voting protocol that leads to near-optimum decisions.

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Cited in

(2)

• Computing large market equilibria using abstractions
• Economic juries and public project provision

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