On the Hardness of Being Truthful

The central problem in computational mechanism design is the tension between incentive compatibility and computational efficiency. We establish the first significant approximability gap between algorithms that are both truthful and computationally-efficient, and algorithms that only achieve one of these two desiderata. This is shown in the context of a novel mechanism design problem which we call the COMBINATORIAL PUBLIC PROJECT PROBLEM (CPPP). CPPP is an abstraction of many common mechanism design situations, ranging from elections of kibbutz committees to network design. Our result is actually made up. of two complementary results - one in the communication-complexity model and one in the computational-complexity model. Both these hardness results heavily rely on a combinatorial characterization of truthful algorithms for our problem. Our computational-complexity result is one of the first impossibility results connecting mechanism design to complexity theory; its novel proof technique involves an application of the Sauer-Shelah Lemma and may be of wider applicability, both within and without mechanism design.