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Truthful aggregation of budget proposals

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  • Freeman, Rupert
  • Pennock, David M.
  • Peters, Dominik
  • Wortman Vaughan, Jennifer

Abstract

We consider a participatory budgeting problem in which each voter submits a proposal for how to divide a single divisible resource (such as money or time) among several possible alternatives (such as public projects or activities) and these proposals must be aggregated into a single aggregate division. Under ℓ1 preferences—for which a voter's disutility is given by the ℓ1 distance between the aggregate division and the division he or she most prefers—the social welfare-maximizing mechanism, which minimizes the average ℓ1 distance between the outcome and each voter's proposal, is incentive compatible (Goel et al., 2019). However, it fails to satisfy a natural fairness notion of proportionality, placing too much weight on majority preferences. Leveraging a connection between market prices and the generalized median rules of Moulin (1980), we introduce the independent markets mechanism, which is both incentive compatible and proportional. We unify the social welfare-maximizing mechanism and the independent markets mechanism by defining a broad class of moving phantom mechanisms that includes both. We show that every moving phantom mechanism is incentive compatible. Finally, we characterize the social welfare-maximizing mechanism as the unique Pareto-optimal mechanism in this class, suggesting an inherent tradeoff between Pareto optimality and proportionality.

Suggested Citation

  • Freeman, Rupert & Pennock, David M. & Peters, Dominik & Wortman Vaughan, Jennifer, 2021. "Truthful aggregation of budget proposals," Journal of Economic Theory, Elsevier, vol. 193(C).
    • Handle: RePEc:eee:jetheo:v:193:y:2021:i:c:s002205312100051x
    DOI: 10.1016/j.jet.2021.105234
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    Cited by:

    1. Felix Brandt & Matthias Greger & Erel Segal-Halevi & Warut Suksompong, 2024. "Optimal Budget Aggregation with Star-Shaped Preferences," Papers 2402.15904, arXiv.org, revised Oct 2024.
    2. Aziz, Haris & Lee, Barton E., 2022. "A characterization of proportionally representative committees," Games and Economic Behavior, Elsevier, vol. 133(C), pages 248-255.
    3. Puppe, Clemens & Rollmann, Jana, 2021. "Mean versus median voting in multi-dimensional budget allocation problems. A laboratory experiment," Games and Economic Behavior, Elsevier, vol. 130(C), pages 309-330.
    4. Haris Aziz & Patrick Lederer & Xinhang Lu & Mashbat Suzuki & Jeremy Vollen, 2024. "Sequential Payment Rules: Approximately Fair Budget Divisions via Simple Spending Dynamics," Papers 2412.02435, arXiv.org.
    5. Kento Yoshida & Kei Kimura & Taiki Todo & Makoto Yokoo, 2024. "Analyzing Incentives and Fairness in Ordered Weighted Average for Facility Location Games," Papers 2410.12884, arXiv.org.
    6. Haris Aziz & Alexander Lam & Mashbat Suzuki & Toby Walsh, 2022. "Random Rank: The One and Only Strategyproof and Proportionally Fair Randomized Facility Location Mechanism," Papers 2205.14798, arXiv.org, revised Jun 2022.
    7. Edith Elkind & Svetlana Obraztsova & Nicholas Teh, 2023. "Temporal Fairness in Multiwinner Voting," Papers 2312.04417, arXiv.org, revised Dec 2023.
    8. Haris Aziz & Alexander Lam & Barton E. Lee & Toby Walsh, 2021. "Strategyproof and Proportionally Fair Facility Location," Papers 2111.01566, arXiv.org, revised Nov 2023.
    9. Nehring, Klaus & Puppe, Clemens, 2022. "Condorcet solutions in frugal models of budget allocation," Working Paper Series in Economics 156, Karlsruhe Institute of Technology (KIT), Department of Economics and Management.
    10. Yu He & Alexander Lam & Minming Li, 2024. "Facility Location Games with Scaling Effects," Papers 2402.18908, arXiv.org, revised Dec 2024.

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    More about this item

    Keywords

    Participatory budgeting; Social choice; Mechanism design;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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