Mechanism Design in Large Games: Incentives and Privacy

In: American economic review, Band 104, Heft 5, S. 431-435

Abstract

We study the design of mechanisms satisfying a novel desideratum: privacy. This requires the mechanism not reveal 'much' about any agent's type to other agents. We propose the notion of joint differential privacy: a variant of differential privacy used in the privacy literature. We show by construction that mechanisms satisfying our desiderata exist when there are a large number of players, and any player's action affects any other's payoff by at most a small amount. Our results imply that in large economies, privacy concerns of agents can be accommodated at no additional 'cost' to standard incentive concerns.