Budget-balanced mechanism

Okay, so let’s say that you and your friends want to decide on what toy to buy for your playgroup. You all have different favorite toys, and you want to make sure everyone is happy with the final decision.

A budget-balanced mechanism is a way to do this fairly, where everyone can vote for their favorite toy, but the final decision is based on how much each person is willing to spend on it.

This means that if someone really wants a fancy toy that costs a lot of money, they’ll have to convince their friends to chip in more money for it. And if someone wants a cheaper toy, they might not have to pay as much.

But, the key is that everyone’s total amount they are willing to spend adds up to exactly the amount needed to buy whichever toy is chosen. This is called being “budget-balanced”, and it ensures that no one is paying more than they want to or less than they should.