Private Pareto Optimal Exchange

We consider the problem of implementing an individually rational, asymptotically Pareto optimal allocation in a barter-exchange economy where agents are endowed with goods and preferences over the goods of others, but may not use money as a medium of exchange. Because one of the most important instantiations of such economies is kidney exchange—where the “input” to the problem consists of sensitive patient medical records—we ask to what extent such exchanges can be carried out while providing formal privacy guarantees to the participants. We show that individually rational allocations cannot achieve any non-trivial approximation to Pareto optimality if carried out under the constraint of differential privacy—or even the relaxation of joint -differential privacy, under which it is known that asymptotically optimal allocations can be computed in two sided markets (Hsu et al. STOC 2014). We therefore consider a further relaxation that we call marginal -differential privacy—which promises, informally, that the privacy of every agent i is protected from every other agent j ≠ i so long as j does not collude or share allocation information with other agents. We show that under marginal differential privacy, it is possible to compute an individually rational and asymptotically Pareto optimal allocation in such exchange economies.