Mechanism Design Theory Research Articles

A Comprehensive Insight into Game Theory in relevance to Cyber Security

The progressively ubiquitous connectivity in the present information systems pose newer challenges tosecurity. The conventional security mechanisms have come a long way in securing the well-definedobjectives of confidentiality, integrity, authenticity and availability. Nevertheless, with the growth in thesystem complexities and attack sophistication, providing security via traditional means can beunaffordable. A novel theoretical perspective and an innovative approach are thus required forunderstanding security from decision-making and strategic viewpoint. One of the analytical tools whichmay assist the researchers in designing security protocols for computer networks is game theory. Thegame-theoretic concept finds extensive applications in security at different levels, including thecyberspace and is generally categorized under security games. It can be utilized as a robust mathematicaltool for modelling and analyzing contemporary security issues. Game theory offers a natural frameworkfor capturing the defensive as well as adversarial interactions between the defenders and the attackers.Furthermore, defenders can attain a deep understanding of the potential attack threats and the strategiesof attackers by equilibrium evaluation of the security games. In this paper, the concept of game theoryhas been presented, followed by game-theoretic applications in cybersecurity including cryptography.Different types of games, particularly those focused on securing the cyberspace, have been analysed andvaried game-theoretic methodologies including mechanism design theories have been outlined foroffering a modern foundation of the science of cybersecurity.

On the Pedigree of Hurwicz’s Economic Thought and Its Methodology

The mechanism design theory founded by Hurwicz is the inheritance and development of neoclassical economics. Hurwicz’s research did not deviate from Eggertsson’s statement of the hard core of neoclassical economics, but there were new developments in the theoretical framework and research methods by Hurwicz. On the one hand, he broke the old thinking framework that regarded system and mechanism as exogenous and nonadjustable variables. He introduced mechanism design into economic analysis, which deepened the understanding of the essence, change and choice of institution. On the other hand, he introduced game theory, a tool of mathematical analysis, into the study of market economy theory, especially the process of economic exchange and the theory of economic resource allocation. Although the core of game theory is still the utility maximization of rational economic man based on individual standard advocated by neoclassical economics, it also reveals the potential damage to the overall utility caused by the promotion of individual rationality lacking the spirit of cooperation. The economic theory innovation of Hurwicz is of great practical significance to the innovation and development of economics in China and the deepening of the market-oriented reform and opening-up in the new era.This paper provides the following conclusions through a literature survey of Hurwicz’s writings. Firstly, the mechanism design theory originated from the controversy over plan and market in the 1920s and 1930s and gradually extended to the core proposition of the relationship between government and market. Hurwicz established a pedigree of economic thought with inherent logic incorporating economic freedom, decentralized decision-making, information efficiency and incentive compatibility. Secondly, Hurwicz’s economic methodology focuses on the axiomatic logical analysis method of deductive reasoning. That is to say, it intends to interpret the economic world through functional relationship between digitized economic variables, mathematical logical deduction of axiomatic propositions and the equilibrium state in mechanical sense, emphasizes logical deduction over historical induction in research, reveals the logical mechanism from both holistic and individual points of view, and thus demonstrates the mechanism optimization of the real world.To sum it up, this paper extends the existing researches from three aspects. Firstly, it investigates Hurwicz’s economic thought in the context of the overall development of modern economics in the middle and late 20th century, and deconstructs the core propositions and basic elements in the pedigree of his thought. Secondly, it captures the logical substance and main characteristics of Hurwicz’s economic research methodology through a review of his academic track and achievements. Thirdly, based on the analysis of Hurwicz’s economic thought pedigree and its methodology, this paper sums up the implications for China’s further promotion of economic theory innovation and market-oriented reform deepening.

Technology of Vibration Energy Harvester and Its Application in Vertical Axis Wind Turbine

With the continuous development of mechanical design theory, materials and machining technology, the energy utilization rate of traditional machinery has been approaching the limit. The exhaustion of energy forces mechanical designers to make breakthroughs in the efficient use of energy. Therefore, the technology of energy harvester based on mechanical vibration has been well developed. Based on piezoelectric, electromagnetic, electrostatic, piezoelectric-electromagnetic coupling, and four types of vibration energy harvesting technologies principle and the typical research achievements, systematic analysis of various kinds of vibration energy harvesting technologies features, development and application of the technical difficulties and constraints, the last small Vertical axis wind turbine, for example, analysis of vibration energy harvesting technologies applied in the actual mechanical feasibility and implementation scheme, thus provided for the research and application of vibration energy harvesting equipment development direction and technical guidance.

A Blockchain-Based Hybrid Incentive Model for Crowdsensing

Crowdsensing is an emerging paradigm of data aggregation, which has a pivotal role in data-driven applications. By leveraging the recruitment, a crowdsensing system collects a large amount of data from mobile devices at a low cost. The critical issues in the development of crowdsensing are platform security, privacy protection, and incentive. However, the existing centralized, platform-based approaches suffer from the single point of failure which may result in data leakage. Besides, few previous studies have addressed the considerations of both the economic incentive and data quality. In this paper, we propose a decentralized crowdsensing architecture based on blockchain technology which will help improve the attack resistance. Furthermore, we present a hybrid incentive mechanism, which integrates the data quality, reputation, and monetary factors to encourage participants to contribute their sensing data while discouraging malicious behaviors. The effectiveness our of proposed incentive model is verified through a combination of the theory of mechanism design. The performance analysis and simulation results illustrate that the proposed hybrid incentive model is a reliable and efficient mean to promote data security and incentivizing positive conduct on the crowdsensing application.

The incompatibility in urban green space provision: An agent-based comparative study

The benefits of sustainable planning and green neighbourhood are perceived by people worldwide. However, failures in implementing the greening strategies, such as the shortage and unequal accessibility of urban green space (UGS) have been discovered, which are generally attributed to incompatible interests of rational stakeholders. By applying the Mechanism Design (MD) theory, also called reverse game theory, this study aims to explore the relationship between UGS spatial layout and agents’ utilities in urban planning under the contexts of growing cities. Taking two projects in Hong Kong and New York as case study, an agent-based cellular landscape model is established to demonstrate the changes of agents’ utilities with UGS layouts and to identify the incompatible interests in UGS optimisation. The two cases represent the planning under public and private land ownership in general. It is found that the reduction of buildable land is the biggest obstacle for providing UGS, while land sale income and expense for purchasing public land are the incompatible factors for cities under public and private land ownerships respectively. This study provides an approach to examining the incompatibility of multiple agents with economic and social considerations of UGS provision that would facilitate green development in growing cities.

Information Diffusion and Revenue Optimization in Distribution Market

Intermediaries refer to agents that facilitate the resource allocation under certain constrain conditions. In a distribution market, buyers and sellers often interact via intermediaries and pay commissions to them. Due to the inadequacy of information spreading, a commodity can only be allocated to some agent who is close to the seller, which not only decreases the economic efficiency but also limits the seller's revenue. To tackle these two problems simultaneously, which is commonly a difficult objective in multi-agent systems, we use mechanism design theory and graph algorithms to develop a new auction protocol called Multi-Level Diffusion Mechanism (MLDM). Even when there are costs for assisting in others' trades, this mechanism can encourage every intermediary to help spread the selling information, either or not she has personal preference of the commodity. We show MLDM performs better than the second price auction both in theory and in numerical simulation no matter how agents' valuations and commissions are distributed.

交通机械类研究生课程PBL培养模式研究——以《现代机械设计理论与方法》为例

交通机械类研究生课程PBL培养模式研究——以《现代机械设计理论与方法》为例

An Incentive Compatible Mechanism for Replica Placement in Peer-Assisted Content Distribution

Content delivery is a key technology on the Internet to achieve large scale, low-latency, reliable, and intelligent data delivery. Replica placement (RP) is a key machinery in content delivery systems to achieve efficient and effective content delivery. This work proposes a novel decentralized algorithm for the replica placement in peer-assisted content delivery networks with simultaneous considerations for peer incentives. By applying techniques from the algorithmic mechanism design theory, the authors show the incentive compatibility of the proposed algorithm. Experiments were conducted to validate the properties of the proposed method and comparisons were made with the state-of-the-art RP algorithms.

Towards System Theory of Communication-field Mechanism Design

Towards System Theory of Communication-field Mechanism Design

Pushing carbon footprint reduction along environment with carbon-reducing information asymmetry

Pushing carbon footprint reduction (CFR) by means of carbon regulation has received increasing attention. However, extant research primarily focuses on the design of carbon regulation under complete information, neither the feature of carbon regulation under asymmetric information nor the role of private information in the government-firm relationship has been explored. In this paper, we investigate the issue of government-firm contracting for CFR in the context of carbon-reducing information asymmetry. Two cases are considered: The single asymmetric information case where the firm’s carbon-reducing effort is privately known to himself, and the dual asymmetric information case in which neither the firm’s carbon-reducing capacity nor his effort is visible to the government. Carbon contracting model in each case is developed by mechanism design and game theory. To examine the effectiveness of these carbon contracts, the benchmark with complete information is further studied. Comparative statics and sensitive analysis show that the carbon contracts under information asymmetry can efficiently motivate the firm to reduce carbon footprint. In particular, under single asymmetric information, the government appropriately adjusts the optimal contractual configurations to maximize the expected welfare, leaving the firm to get the reservation profit. Under dual asymmetric information, the government’s best choice is to offer a menu of carbon contracts which enables the firm to obtain extra information rent that is increasing in his carbon-reducing capacity. We explicitly identify conditions under which the screening mechanism works and reveal that the menu of carbon contracts not only induces the firm to reveal his true carbon-reducing capacity but also motivates him to make the best effort to reduce carbon footprint. Our findings provide the government with a theoretical basis regarding carbon regulation under information asymmetry, as well as help firms make appropriate selections when signing low-carbon contracts with the government.

Graphic illustration for mechanical reliability design (2): theory and method

In this paper, the connotation and an extension of the mechanical reliability design theory and method are presented via charts and texts. The abstruse mechanical reliability theories and methods are illustrated intuitively and scientifically via easy-to-understand language and simple and clear illustrations. Topics such as mechanical strength design, mechanical reliability design, dynamic and gradual reliability design, reliability optimization design, reliability sensitivity design and reliability robust design are covered to help the readers understand the wonder and practicality of mechanical reliability engineering. Diagrams of reliability design, dynamic and gradual reliability theory and technology, reliability optimization design, reliability sensitivity design and reliability robust design are illustrated for the first time. Additionally, the relationship between mechanical product reliability design and conventional safety factor design is elaborated in a table. This paper provides a solid mechanical reliability engineering foundation for design, manufacturing, usage and evaluation of mechanical products.

Multiple Games Analysis: A Petri Dish for Growing Polycentric Orders

Game theory, as originally envisioned, is a tool to theorize about social interaction. As game theory became geared towards prediction and control, branching into mechanism and market design theory, its mathematical sophistication focused on solution spaces and, ultimately, the attainment of steady states or simple patterned behavior. I contend that game theory can also describe complex behavior like spontaneous emergence, the development process of polycentric influence hierarchies, and the emergence and survival of institutional forms. Multiple games analysis expands the solution spaces of classic games like the prisoner’s dilemma and the principal agent game, not by including conditioning stages or evolving the game in a repeating fashion, but through a detailed expansion of the game itself.

Evolutionary dynamics for the generalized Baliga–Maskin public good model

Abstract The problem of the consumption or provision of common and public goods is a well known and well studied problem in economic sciences. The nature of the problem is the existence of non-excludable externalities which gives rise to incentives to free-riding behaviour. There are several economical frameworks trying to deal with the problem such as coalition theory or mechanism design and implementation theory to ensure a Pareto efficient consumption or provision of such good. Baliga and Maskin considered an environmental game where several communities face a problem of pollution reduction. They show that all communities except one of them have incentives to act as a free-rider, i.e. only one community is willing to face the costs that air cleaning implies, namely the one with greatest preference for the good. In this work we introduce an adaptive evolutionary dynamics for the generalization of the Baliga–Maskin model to quasi-linear utility functions. We show that the Baliga–Maskin equilibrium is the only asymptotically stable dynamical equilibrium, all others being unstable. This result reasserts the problem of free-riding and externalities for the case of a common good in a dynamically/evolutionary setting, and reiterates the relevance of mechanism design and coalition formation in the context of dynamical models.

The normative gap: mechanism design and ideal theories of justice

AbstractThis paper investigates the relationship between economic theory and theories of justice in the design of public policy. In particular, it focuses on the role of mechanism design in policy contexts beset with issues of social, racial and distributive justice. Economists’ involvement in redesigning Boston’s algorithm for allocating K-12 students to public schools serves as an instructive case study. The paper draws on the distinction betweenideal theoryandnon-ideal theoryin political philosophy and the concept ofperformativityin economic sociology to argue that mechanism design can enact elaborate ideal theories of justice. Anormative gapthus emerges between the goals of the policymakers and the objectives of economic designs. As a result, mechanism design may obstruct stakeholders’ avenues for normative criticism of public policies, and serve as a technology of depoliticization.

Fuzzy Multi-SVR Learning Model for Reliability-Based Design Optimization of Turbine Blades.

The effectiveness of a model is the key factor of influencing the reliability-based design optimization (RBDO) of multi-failure turbine blades in the power system. A machine learning-based RBDO approach, called fuzzy multi-SVR learning method, was proposed by absorbing the strengths of fuzzy theory, support vector machine of regression (SVR), and multi-response surface method. The model of fuzzy multi-SVR learning method was established by adopting artificial bee colony algorithm to optimize the parameters of SVR models and considering the fuzziness of constraints based on fuzzy theory, in respect of the basic thought of multi-response surface method. The RBDO model and procedure with fuzzy multi-SVR learning method were then resolved and designed by multi-objective genetic algorithm. Lastly, the fuzzy RBDO of a turbine blade with multi-failure modes was performed regarding the design parameters of rotor speed, temperature, and aerodynamic pressure, and the design objectives of blade stress, strain, and deformation, and the fuzzy constraints of reliability degree and boundary conditions, as well. It is revealed (1) the stress and deformation of turbine blade are reduced by 92.38 MPa and 0.09838 mm, respectively. (2) The comprehensive reliability degree of the blade was improved by 3.45% from 95.4% to 98.85%. (3) It is verified that the fuzzy multi-SVR learning method is workable for the fuzzy RBDO of complex structures just like a multi-failure blade with high modeling precision, as well as high optimization, efficiency, and accuracy. The efforts of this study open a new research way, i.e., machine learning-based RBDO, for the RBDO of multi-failure structures, which expands the application of machine learning methods, and enriches the mechanical reliability design method and theory as well.

Dynamic Mechanism Design: An Introduction

We provide an introduction to the recent developments of dynamic mechanism design, with a primary focus on the quasilinear case. First, we describe socially optimal (or efficient) dynamic mechanisms. These mechanisms extend the well-known Vickrey– Clark–Groves and D’Aspremont–Gérard–Varet mechanisms to a dynamic environment. Second, we discuss revenue optimal mechanisms. We cover models of sequential screening and revenue-maximizing auctions with dynamically changing bidder types. We also discuss models of information management where the mechanism designer can control (at least partially) the stochastic process governing the agents’ types. Third, we consider models with changing populations of agents over time. After discussing related models with risk-averse agents and limited liability, we conclude with a number of open questions and challenges that remain for the theory of dynamic mechanism design. ( JEL D44, D81, D82)

Dynamic Unstructured Bargaining with Private Information: Theory, Experiment, and Outcome Prediction via Machine Learning

We study dynamic unstructured bargaining with deadlines and one-sided private information about the amount available to share (the “pie size”). Using mechanism design theory, we show that given the players’ incentives, the equilibrium incidence of bargaining failures (“strikes”) should increase with the pie size, and we derive a condition under which strikes are efficient. In our setting, no equilibrium satisfies both equality and efficiency in all pie sizes. We derive two equilibria that resolve the trade-off between equality and efficiency by favoring either equality or efficiency. Using a novel experimental paradigm, we confirm that strike incidence is decreasing in the pie size. Subjects reach equal splits in small pie games (in which strikes are efficient), while most payoffs are close to either the efficient or the equal equilibrium prediction, when the pie is large. We employ a machine learning approach to show that bargaining process features recorded early in the game improve out-of-sample prediction of disagreements at the deadline. The process feature predictions are as accurate as predictions from pie sizes only, and adding process and pie data together improves predictions even more.Data are available at https://doi.org/10.1287/mnsc.2017.2965 .This paper was accepted by Uri Gneezy, behavioral economics.

Coвременные течения в теориях Экономических измерений: анализ и макроэкономические последствия (Modern Developments within the Fields of Economic Measurements: Analysis and Macroeconomic Implications)

Russian Abstract: В этой главе, написанной для подготавливаемой книги по проблемам политики экономического развития, подчеркивается роль, которую современные теории в области экономических измерений (в частности, триада Профессиональной стоимостной оценки (ПСО), Инвестиционно-финансовой оценки (ИФО) и Оценки эффективности инвестиционных проектов (ОЭИП)) могут сыграть роль в разрешении современных противоречий экономического развития. Утверждается, что современные приложения неоклассической теории оценки, такие как CAPM и другие технические средства в наборе инструментов ИФО, когда они используются вне контекста для оценки реальных, а не ликвидных финансовых активов, приводят к ощутимым искажениям цен и дестабилизации рынков. Различного вида процикличности, масштаб и механика которых , особенно с привязкой к рынку недвижимости, анализируются в предложенном материале -- на основе современных альтернативных теоретических возрений, основанных на понятиях теории фундаментальной стоимости и проектирования механизмов сделок, включая Транзакционный подход к ценообразованию активов (TAPA). Мы даем обзор предмета, чтобы показать, насколько современные работы по Экономическим измерениям актуальны для вопросов экономического развития, и иллюстрируем макроэкономически устойчивые способы переориентации аналитического видения оценки реальных активов в каждой из выделенных областей в континууме Экономических измерений. English Abstract: This chapter written for an upcoming book on Economic development policy challenges highlights a role that modern theories in the field of Economic Measurements (in particular, the Professional Valuation (PV), the Investment-Financial Valuation (IFV) and the Assessment of Efficiency of Investment projects (AEIP) triad) could play in resolving the modern contradictions of Economic development. It is claimed that the modern neoclassical valuation theory applications, such as CAPM and other techinques within the IFV toolkit, when put to out-of-context uses to value real, as opposed to liquid financial, assets result in tangible pricing distortions and distabilizing market procyclicalities, the extent and mechanics of which are analyzed, especially with reference to the property market, on the basis of modern alternative theoretical pathways reliant on the notion of fundamental value and transaction mechanism design theories, including the Transactional Asset Pricing Approach (TAPA). We provide an overview of the subject to show how the modern work on Economic Measurements is relevant to the issues of Economic development and illustrate macro-economically sustainable ways for refocusing the anaytical pre-vision for valuation of real assets for each of the fields within the Economic Measurement traid. This work has been conducted under the sponsorship of the RNF grant 18-18-0048.

Incentive mechanisms to prevent efficiency loss of non-profit utilities

The modernization of the power system introduces technologies that may improve the system’s efficiency by enhancing the capabilities of users. Despite their potential benefits, such technologies can have a negative impact. This subject has widely analyzed, mostly considering for-profit electric utilities. However, the literature has a gap regarding the impact of new technologies on non-profit utilities.In this work, we quantify the price of anarchy of non-profit utilities, that is, the cost caused by lack of coordination of users. We find that users, in the worst case, can consume up to twice the optimal demand, obtaining a small fraction of the optimal surplus. For this reason, we leverage the theory of mechanism design to design an incentive scheme that reduces the inefficiencies of the system, which preserves the privacy of users. We illustrate with simulations the efficiency loss of the system and show two instances of incentive mechanism that satisfy either budget balance and budget deficit.

Jean Tirole: Mathematician-Economist-Humanist

Jean Tirole, the Nobel Prize winner in Economic Sciences in 2014, who in November 2018 visited the Financial university in Moscow, presents one of the most striking examples of the evolution currently experienced by some modern economists. He started his career as an economist at the time of rapid development of theories of regulation and competition policy. It was also the time of intensive development of industrial organisation (industrial economy), and especially its branch oriented to the public policy issues — economic regulation, antitrust law, and, more generally, economic governance of law in defning property rights, enforcing contracts, and providing organisational infrastructure. The progress in these areas reflected two methodological breakthroughs: the game theory and the theory of mechanism design. The widening use of game theory in industrial economics led to the migration of its achievements into other branches of microeconomics, such as behavioural economics and corporate fnance. In 1978, Jean Tirole left for the uSA to get a PhD in Economics at the Massachusetts Institute of Technology (MIT). He began his formation as an economist. The article tells about Jean Tirole’s way from an engineer and mathematician to the world-class economist. The author has paid special attention to the traditions of the French economic science, which had a considerable impact on the main areas of scientifc interests of Jean Tirole. Tirole’s managerial skills allowed to build an entire scientifc school around him both at the university of Toulouse and the Jean-Jaques Laffont Foundation, and in the newly formed Institute for Advanced Research.