Public Projects with Preferences and Predictions

Mary Monroe, Bo Waggoner

Abstract: When making a decision as a group, there are two primary paradigms: aggregating preferences (e.g. voting, mechanism design) and aggregating information (e.g. discussion, consulting, forecasting). Almost all formally-studied group decisionmaking mechanisms fall under one paradigm or the other, but not both. We consider a public projects problem with the objective of maximizing utilitarian social welfare. Decisionmakers have both preferences, modeled as utility functions over the alternatives; and information, modeled as Bayesian signals relevant to the alternatives' external welfare impact. Aligning incentives is highly challenging because, on the one hand, agents can provide bad information in order to manipulate the mechanism into satisfying their preferences; and on the other hand, they can misreport their preferences to favor selection of an alternative for which their information rewards are high. We propose a two-stage mechanism for this problem. The forecasting stage aggregates information using either a wagering mechanism or a prediction market (the mechanism is modular and compatible with both). The voting stage aggregates preferences, together with the forecasts from the previous stage, and selects an alternative by leveraging the recently-studied Quadratic Transfers Mechanism. We show that, when carefully combined, the entire two-stage mechanism is robust to manipulation of all forms, and under weak assumptions, satisfies Price of Anarchy guarantees. In the case of two alternatives, the Price of Anarchy tends to 1 as natural measures of the "size" of the population grow large. In most cases, the mechanisms achieve a balanced budget as well. We also give the first nonasymptotic Price of Anarchy guarantee for the Quadratic Transfers Mechanism, a result of independent interest.