Funding Games: the Truth but not the Whole Truth

We introduce the Funding Game, in which $m$ identical resources are to be allocated among $n$ selfish agents. Each agent requests a number of resources $x_i$ and reports a valuation $\tilde{v}_i(x_i)$, which verifiably {\em lower}-bounds $i$'s true value for receiving $x_i$ items. The pairs $(x_i, \tilde{v}_i(x_i))$ can be thought of as size-value pairs defining a knapsack problem with capacity $m$. A publicly-known algorithm is used to solve this knapsack problem, deciding which requests to satisfy in order to maximize the social welfare. We show that a simple mechanism based on the knapsack {\it highest ratio greedy} algorithm provides a Bayesian Price of Anarchy of 2, and for the complete information version of the game we give an algorithm that computes a Nash equilibrium strategy profile in $O(n^2 \log^2 m)$ time. Our primary algorithmic result shows that an extension of the mechanism to $k$ rounds has a Price of Anarchy of $1 + \frac{1}{k}$, yielding a graceful tradeoff between communication complexity and the social welfare.