Strategyproof

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In game theory, an asymmetric game where players have private information is said to be strategyproof (or truthful) if there is no incentive for any of the players to lie about or hide their private information from the other players.

The strategyproof concept has applications in several areas of game theory and economics. For example, payment schemes for network routing. Consider a network as a graph where each edge (i.e. link) has an associated cost of transmission, privately known to the owner of the link. The owner of a link wishes to be compensated for relaying messages.

As the sender of a message on the network, one wants to find the least cost path. There are efficient methods for doing so, even in large networks. However, there is one problem: the costs for each link are unknown. A naive approach would be to ask the owner of each link the cost, use these declared costs to find the least cost path, and pay all links on the path their declared costs. However, it can be shown that this payment scheme is not strategyproof, that is, the owners of some links can benefit by lying about the cost. We may end up paying far more than the actual cost.

It can be shown that given certain assumptions about the network and the players (owners of links), there do exist strategyproof payment schemes. An important one is the Vickrey–Clarke–Groves (VCG) scheme.

Strategyproofness is also known as Dominant Strategy Incentive Compatibility.

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