Optimal resource allocation over networks via lottery-based mechanisms

DOI10.1007/978-3-030-16989-3_4MaRDI QIDQ6201688zbMATH OpenFDO

Authors Soham R. Phade, Venkat Anantharam

Publication date 25 March 2024

Published in Lecture Notes of the Institute for Computer Sciences, Social Informatics and Telecommunications Engineering (Search for Journal in Brave)

Full work available at URL https://arxiv.org/abs/1812.00501

zbMATH Keywords

cumulative prospect theorylotterynetworksresource allocation

Mathematics Subject Classification ID

Games involving graphs (91A43) Applications of game theory (91A80) Utility theory (91B16) Resource and cost allocation (including fair division, apportionment, etc.) (91B32)

Abstract: We show that, in a resource allocation problem, the ex ante aggregate utility of players with cumulative-prospect-theoretic preferences can be increased over deterministic allocations by implementing lotteries. We formulate an optimization problem, called the system problem, to find the optimal lottery allocation. The system problem exhibits a two-layer structure comprised of a permutation profile and optimal allocations given the permutation profile. For any fixed permutation profile, we provide a market-based mechanism to find the optimal allocations and prove the existence of equilibrium prices. We show that the system problem has a duality gap, in general, and that the primal problem is NP-hard. We then consider a relaxation of the system problem and derive some qualitative features of the optimal lottery structure.

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