Routing-Proofness in Congestion-Prone Networks

Abstract

We consider the problem of sharing the cost of connecting a large number of atomless agents in a network. The centralized agency elicits the target nodes that agents want to connect, and charges agents based on their demands. We look for a cost-sharing mechanism that satisfies three desirable properties: efficiency which charges agents based on the minimum total cost of connecting them in a network, stand-alone core stability which requires charging agents not more than the cost of connecting by themselves directly, and limit routing-proofness which prevents agents from profitable reporting as several agents connecting from A to C to B instead of A to B. We show that these three properties are not always compatible for any set of cost functions and demands. However, when these properties are compatible, a new egalitarian mechanism is shown to satisfy them. When the properties are not compatible, we find a rule that meets stand-alone core stability, limit routing-proofness and minimizes the budget deficit.