Evolutionary mechanism design: a review

Abstract

The advent of large-scale distributed systems poses unique engineering challenges. In open systems such as the internet it is not possible to prescribe the behaviour of all of the components of the system in advance. Rather, we attempt to design infrastructure, such as network protocols, in such a way that the overall system is robust despite the fact that numerous arbitrary, non-certified, third-party components can connect to our system. Economists have long understood this issue, since it is analogous to the design of the rules governing auctions and other marketplaces, in which we attempt to achieve sociallydesirable outcomes despite the impossibility of prescribing the exact behaviour of the market participants, who may attempt to subvert the market for their own personal gain. This field is known as "mechanism design": the science of designing rules of a game to achieve a specific outcome, even though each participant may be self-interested. Although it originated in economics, mechanism design has become an important foundation of multi-agent systems (MAS) research. In a traditional mechanism design problem, analytical methods are used to prove that agents' game-theoretically optimal strategies lead to socially desirable outcomes. In many scenarios, traditional mechanism design and auction theory yield clear-cut results; however, there are many situations in which the underlying assumptions of the theory areWe are grateful for financial support received from the UK EPSRC through the Market-Based Control of Complex Computational Systems Project 123 238 Auton Agent Multi-Agent Syst (2010) 21:237-264 violated due to the messiness of the real-world. In this paper we review alternative approaches to mechanism design which treat it as an engineering problem and bring to bear engineering design principles, viz.: iterative step-wise refinement of solutions, and satisficing instead of optimization in the face of intractable complexity. We categorize these approaches under the banner of evolutionary mechanism design.

SORMA – Business Cases for an Open Grid Market: Concept and Implementation

“…Hence, they aim to implement a strategic behavior in order to maximize their utilities. In this context the mechanism design and auction literature investigated various bidding strategies for market-based scheduling [16,20,22]. Such strategic behavior is ranging from the selection of the right auction to the published/requested resource configuration or the definition of the willingness-to-pay/reserve price.…”

“…Personalized bidding agents will be configured with a set of strategies and learning algorithms in order to automatically execute the providers' or consumers' preferences. In his thesis [20], Phelps classified bidding strategies into non-adaptive e.g. Truth Telling, Equilibrium-Price and Zero Intelligence strategy and adaptive strategies e.g.…”

Q-Strategy: A Bidding Strategy for Market-Based Allocation of Grid Services

“…Although a simple strategy, truth-telling is essential in case of strategy-proof mechanisms, where in such mechanisms this strategy guarantees to obtain optimal payoffs, no matter what strategies are adopted by the others. However, in budget-balanced doubleauction mechanisms, this strategy is not dominant [11].…”

“…The literature described trading agents in stock markets [37], supply chain management [Pardoe and and in various market mechanisms [38,39] Since agents are self-interested, they aim to implement a strategic behavior in order to maximize their utilities. In this context the mechanism design and auction literature investigated various bidding strategies for marketbased scheduling [40,11,41,42]. Phelps elaborated co-evolution algorithms to learn the strategy space for autonomous bidding by the allocation of resources in market mechanisms.…”

Rational Bidding Using Reinforcement Learning

“…Although it is a simple strategy, truth-telling is essential in case of incentive-compatible mechanisms, where this strategy guarantees to obtain the optimal pay-offs for consumers no matter what strategies are adopted by the others. In budget-balanced doubleauction mechanisms, this strategy is not dominant [7].…”