Online reputation mechanisms need honest feedback to function effectively. Self interested agents report the truth only when explicit rewards offset the cost of reporting and the potential gains that can be obtained from lying. Side-payment schemes (monetary rewards for submitted feedback) can make truth-telling rational based on the correlation between the reports of different buyers. In this paper we use the idea of automated mechanism design to construct the payments that minimize the budget required by an incentive-compatible reputation mechanism. Such payment schemes are defined by a linear optimization problem that can be solved efficiently in realistic settings. Furthermore, we investigate two directions for further lowering the cost of incentive-compatibility: using several reference reports to construct the side-payments, and filtering out reports that are probably false.
The design problem is a linear optimization problem and can be solved efficiently REF .
Minimum payments that reward honest reputation feedback
EC '06
Computer Science