 
Summary: Frugal Path Mechanisms
Aaron Archer # ’
Eva Tardos +
Abstract
We consider the problem of selecting a low cost s  t path in a graph, where the edge costs
are a secret known only to the various economic agents who own them. To solve this problem,
Nisan and Ronen applied the celebrated VickreyClarkeGroves (VCG) mechanism, which pays
a premium to induce the edges to reveal their costs truthfully. We observe that this premium
can be unacceptably high. There are simple instances where the mechanism pays #(n) times
the actual cost of the path, even if there is an alternate path available that costs only (1 + #)
times as much. This inspires the frugal path problem, which is to design a mechanism that
selects a path and induces truthful cost revelation without paying such a high premium.
This paper contributes negative results on the frugal path problem. On two large classes
of graphs, including ones having three nodedisjoint s  t paths, we prove that no reasonable
mechanism can always avoid paying a high premium to induce truthtelling. In particular,
we introduce a general class of min function mechanisms, and show that all min function
mechanisms can be forced to overpay just as badly as VCG. On the other hand, we prove that
(on two large classes of graphs) every truthful mechanism satisfying some reasonable properties
is a min function mechanism.
1 Introduction
