Faithful Implementations of Distributed Algorithms and Control Laws

Abstract: When a distributed algorithm must be executed by strategic agents with misaligned interests, a social leader needs to introduce an appropriate tax/subsidy mechanism to incentivize agents to faithfully implement the intended algorithm so that a correct outcome is obtained. We discuss the incentive issues of implementing economically efficient distributed algorithms using the framework of indirect mechanism design theory. In particular, we show that indirect Groves mechanisms are not only sufficient but also necessary to achieve incentive compatibility. This result can be viewed as a generalization of the Green-Laffont theorem to indirect mechanisms. Then we introduce the notion of asymptotic incentive compatibility as an appropriate solution concept to faithfully implement distributed and iterative optimization algorithms. We consider two special types of optimization algorithms: dual decomposition algorithms for resource allocation and average consensus algorithms.