Exposing Market Mechanism Design Trade-offs via Multi-objective Evolutionary Search

Arjun Chandra, Richard Allmendinger, Peter R. Lewis, Xin Yao and Jim Torresen
In Proceedings of the IEEE Congress on Evolutionary Computation (CEC) 2013, Cancun, Mexico, pp 1515-1522. IEEE Press, 2013.

Market mechanisms are a means by which resources in contention can be allocated between contending parties, both in human economies and those populated by software agents. Designing such mechanisms has traditionally been carried out by hand, and more recently by automation. Assessing these mechanisms typically involves them being evaluated with respect to multiple conflicting objectives, which can often be non-linear, noisy, and expensive to compute. For typical performance objectives, it is known that designed mechanisms often fall short on being optimal across all objectives simultaneously. However, in all previous automated approaches, either only a single objective is considered, or else the multiple performance objectives are combined into a single objective. In this paper we do not aggregate objectives, instead considering a direct, novel application of multi-objective evolutionary algorithms (MOEAs) to the problem of automated mechanism design. This allows the automatic discovery of trade-offs that such objectives impose on mechanisms. We pose the problem of mechanism design, specifically for the class of linear redistribution mechanisms, as a naturally existing multi-objective optimisation problem. We apply a modified version of NSGA-II in order to design mechanisms within this class, given economically relevant objectives such as welfare and fairness. Such an application of NSGA-II exposes trade-offs between objectives, and reveals relationships between them that were not otherwise known for this mechanism class. The understanding of the trade-off gained from the application of MOEAs can thus help practitioners with an insightful application of discovered mechanisms in their respective real or artificial markets.

@inproceedings{chandra_2013_exposing,
title = "Exposing Market Mechanism Design Trade-offs via Multi-objective Evolutionary Search",
booktitle = "Proceedings of the IEEE Congress on Evolutionary Computation (CEC) 2013",
author = "Arjun Chandra and Richard Allmendinger and Peter R. Lewis and Xin Yao and Jim Torresen",
location = "Cancun, Mexico",
publisher = "IEEE Press",
year = "2013",
pages = "1515--1522"
}