Barter Exchange via Friends' Friends

Abstract

Barter exchange studies the setting where each agent owns a good, and they can exchange with each other if that gives them more preferred goods. This exchange will give better outcomes if there are more participants. The challenge here is how to get more participants and our goal is to incentivize the existing participants to invite new participants. However, new participants might be competitors for the existing participants. Therefore, we design an exchange mechanism based on the classical Top Trading Cycle (TTC) algorithm to solve their conflicts. Our mechanism is truthful in terms of revealing their preferences and also guarantees that inviting all their neighbors is a dominant strategy for all participants. The mechanism can be applied in settings where more participants are preferred but no extra budget to reach new participants.