A transaction fee mechanism should guarantee that users pay the minimum price necessary for bid confirmation. It has been shown that simultaneously achieving user incentive compatibility, miner incentive compatibility, and global surplus conditions in deterministic systems is impossible. This limitation is further highlighted when considering randomized mechanisms. Additionally, the revelation principle confirms that if truthful mechanisms cannot meet requirements, non-truthful mechanisms will also fail. This has significant implications on the feasibility of designing effective transaction fee mechanisms with desired properties.
A transaction fee mechanism is non-trivial when it ensures that user i pays a minimal price to have their bid confirmed, affecting their utility.
It is demonstrated that no non-trivial transaction fee mechanism can satisfy simultaneously the conditions of user incentive compatibility and miner incentive compatibility alongside a global surplus condition.
The impossibility of achieving user incentive compatibility, miner incentive compatibility, and global surplus conditions in deterministic mechanisms reveals inherent limitations within transaction fee systems.
The revelation principle indicates that proving impossibility for truthful mechanisms extends to non-truthful mechanisms, emphasizing a critical boundary in the design of transaction fee mechanisms.
#transaction-fee-mechanism #incentive-compatibility #deterministic-mechanisms #randomized-mechanisms #revelation-principle
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