The Efficiency of Resource Allocation Mechanisms for Budget-Constrained Users
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Publication:5000644
Abstract: We study the efficiency of mechanisms for allocating a divisible resource. Given scalar signals submitted by all users, such a mechanism decides the fraction of the resource that each user will receive and a payment that will be collected from her. Users are self-interested and aim to maximize their utility (defined as their value for the resource fraction they receive minus their payment). Starting with the seminal work of Johari and Tsitsiklis [Mathematics of Operations Research, 2004], a long list of papers studied the price of anarchy (in terms of the social welfare --- the total users' value) of resource allocation mechanisms for a variety of allocation and payment rules. Here, we further assume that each user has a budget constraint that invalidates strategies that yield a payment that is higher than the user's budget. This subtle assumption, which is arguably more realistic, constitutes the traditional price of anarchy analysis meaningless as the set of equilibria may change drastically and their social welfare can be arbitrarily far from optimal. Instead, we study the price of anarchy using the liquid welfare benchmark that measures efficiency taking budget constraints into account. We show a tight bound of 2 on the liquid price of anarchy of the well-known Kelly mechanism and prove that this result is essentially best possible among all multi-user resource allocation mechanisms. This comes in sharp contrast to the no-budget setting where there are mechanisms that considerably outperform Kelly in terms of social welfare and even achieve full efficiency. In our proofs, we exploit the particular structure of worst-case games and equilibria, which also allows us to design (nearly) optimal two-player mechanisms by solving simple differential equations.
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- scientific article; zbMATH DE number 2086936
Cites work
- A note on the efficiency of position mechanisms with budget constraints
- Composable and efficient mechanisms
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- Efficiency Loss in a Network Resource Allocation Game
- Efficiency of scalar-parameterized mechanisms
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- Liquid price of anarchy
- Liquid welfare maximization in auctions with multiple items
- On the efficiency of the proportional allocation mechanism for divisible resources
- Rate control for communication networks: shadow prices, proportional fairness and stability
- The Price of Anarchy in Auctions
- The price of anarchy and the design of scalable resource allocation mechanisms
- Welfare guarantees for proportional allocations
- Worst-case equilibria
Cited in
(7)- Resource Pooling and Cost Allocation Among Independent Service Providers
- Walrasian pricing in multi-unit auctions
- Auction design for value maximizers with budget and return-on-spend constraints
- Efficiency of scalar-parameterized mechanisms
- Online random sampling for budgeted settings
- A note on the efficiency of position mechanisms with budget constraints
- The Stackelberg equilibria of the Kelly mechanism
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