# A VCG-based Fair Incentive Mechanism for Federated Learning

arXiv: https://arxiv.org/abs/2008.06680 · HTML: https://mlsanity.com/paper/2008.06680/

## Key facts

- Cited by 11 papers in the map (data through 14 Oct 2026).
- First posted on arXiv 15 Aug 2020.

## Built on by (most cited first, 11 of 11)

- [Towards Fairness-Aware Federated Learning](https://mlsanity.com/paper/2111.01872/) (2021)
- [Incentive Mechanisms for Federated Learning: From Economic and Game Theoretic Perspective](https://mlsanity.com/paper/2111.11850/) (2021)
- [A Comprehensive Survey of Incentive Mechanism for Federated Learning](https://mlsanity.com/paper/2106.15406/) (2021)
- [On the Effect of Defections in Federated Learning and How to Prevent Them](https://mlsanity.com/paper/2311.16459/) (2023)
- [Efficient Training of Large-scale Industrial Fault Diagnostic Models through Federated Opportunistic Block Dropout](https://mlsanity.com/paper/2302.11485/) (2023)
- [Trustworthy Federated Learning: A Survey](https://mlsanity.com/paper/2305.11537/) (2023)
- [Intelligent Agents for Auction-based Federated Learning: A Survey](https://mlsanity.com/paper/2404.13244/) (2024)
- [An Auction-based Marketplace for Model Trading in Federated Learning](https://mlsanity.com/paper/2402.01802/) (2024)
- [Efficient Core-selecting Incentive Mechanism for Data Sharing in Federated Learning](https://mlsanity.com/paper/2309.11722/) (2023)
- [Acoustic Model Optimization over Multiple Data Sources: Merging and Valuation](https://mlsanity.com/paper/2410.15620/) (2024)
- [Incentive-Based Federated Learning: Architectural Elements and Future Directions](https://mlsanity.com/paper/2510.14208/) (2025)

## Abstract (arXiv)

The enduring value of the Vickrey-Clarke-Groves (VCG) mechanism has been highlighted due to its adoption by Facebook ad auctions. Our research delves into its utility in the collaborative virtual goods production (CVGP) game, which finds application in realms like federated learning and crowdsourcing, in which bidders take on the roles of suppliers rather than consumers. We introduce the Procurement-VCG (PVCG) sharing rule into existing VCG mechanisms such that they can handle capacity limits and the continuous strategy space characteristic of the reverse auction setting in CVGP games. Our main theoretical contribution provides mathematical proofs to show that PVCG is the first in the CVGP game context to simultaneously achieve truthfulness, Pareto efficiency, individual rationality, and weak budget balance. These properties suggest the potential for Pareto-efficient production in the digital planned economy. Moreover, to compute the PVCG payments in a noisy economic environment, we propose the Report-Interpolation-Maximization (RIM) method. RIM facilitates the learning of the optimal procurement level and PVCG payments through iterative interactions with suppliers.