Mechanism Design in Large Games: Incentives and Privacy

Abstract

We study the problem of implementing equilibria of complete information games in settings of incomplete information, and address this problem using "recommender mechanisms." A recommender mechanism is one that does not have the power to enforce outcomes or to force participation, rather it only has the power to suggestion outcomes on the basis of voluntary participation. We show that despite these restrictions, recommender mechanisms can implement equilibria of complete information games in settings of incomplete information under the condition that the game is large---i.e. that there are a large number of players, and any player's action affects any other's payoff by at most a small amount. Our result follows from a novel application of differential privacy. We show that any algorithm that computes a correlated equilibrium of a complete information game while satisfying a variant of differential privacy---which we call joint differential privacy---can be used as a recommender mechanism while satisfying our desired incentive properties. Our main technical result is an algorithm for computing a correlated equilibrium of a large game while satisfying joint differential privacy. Although our recommender mechanisms are designed to satisfy game-theoretic properties, our solution ends up satisfying a strong privacy property as well. No group of players can learn "much" about the type of any player outside the group from the recommendations of the mechanism, even if these players collude in an arbitrary way. As such, our algorithm is able to implement equilibria of complete information games, without revealing information about the realized types.