Routing-proofness in Congestion-prone Networks

We consider the problem of sharing the cost of connecting a large number of agents in a network. The centralized agency elicits the target nodes that agents want to connect and charges agents based on their demands. We look for a cost-sharing mechanism that satisfies three desirable properties: Efficiency which charges agents based on the minimum total cost of connecting them in a network, Stand-alone core stability which requires charging agents not more than the cost of connecting by themselves directly, and Limit Routing-proofness which prevents agents from profitable by reporting as several agents connecting from A to B to C instead of A to B. We show that these three properties are not always compatible for any set of cost functions and demands. However, when these properties are compatible, we propose the Egalitarian mechanism (EG) and show that it satisfies them. When the properties are not compatible, we find a rule that meets Stand-alone core stability, Limit routing-proofness and minimizes the budget deficit.