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![Page 1: Algorithms: Economic Behavior, Network Games etc. Economic Behavior, Network Games etc. Sanjiv Kapoor (kapoor@iit.edu) Illionis Institute of Technology Market Equilibrium The market](https://reader036.fdocuments.net/reader036/viewer/2022070608/5abafd457f8b9a76038c2d7b/html5/thumbnails/1.jpg)
Algorithms: Economic
Behavior, Network Games etc.
Sanjiv Kapoor ([email protected])
Illionis Institute of Technology
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Market Equilibrium
The market equilibrium problem
History
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Market Model (separable utilities)
n traders and m goods
Each trader has initial
endowments of money
or goods
aij = amount of
commodity j with
trader I
Trader I has a utility
for good j.
Traders Goods
i
j
k
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Walras Market Model
Initial endowment of goodsPrices
= $25 = $15 = $10
Agents/Buyers
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Market: Model
Goods
Agents/Buyers
1 2: ( , , )i nU x x x R
Maximize Utility
$50
$40
$60
$40
=$25 =$15 =$10Prices
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Market: Model
Goods
Agents/Buyers
$50
$40
$60
$40
Find prices so that Demand = Supply =$25 =$15 =$10
Prices
1: ( , )i nU x x R
Maximize Utility
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n traders and m goods
Each trader has initial endowments of goodsaij = amount of commodity j with trader i
Traders have utilities on commodity bundlesui: R+
m R+ .
The market allows traders to exchange commodities
Each trader acts independently to maximize its own happiness
Market equilibrium achieved when there is no incentive to trade
The General Market Model (Walras)
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Mathematical formulation: Market
Equilibrium
Commodities are
divisible
xij: the amount of
commodity j with trader
i after the trade
Commodity j has price
pj
No excess or deficiency
of any commodity
m
j
jij
m
j
jij
n
i
n
i
ij
papxi
axjij
11
11
:
:
j
m
j
ij
m
j
jij
ij
papx
xu
11
i
:Subject to
)(:Maximize
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The Fisher’s Market Model
Special case of the Walrasian Model
There are n buyers and m goods
Buyers have only money
(buyer i has ei units of money)
Goods must be all sold, buyers maximize
their bang/buck.
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Market Equilibrium History
Posed by 1891 Fisher
1894 Walras (Walrasian Equilibrium)
Existence 1954 Arrow and Debreu
Computation Hydraulic apparatus by Fisher
Tatonnement process (Walras)
Does it converge?
Arrow et al. 1959
Stability of a local greedy price adjustment method for “Gross Substitute” utility functions
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Computation of Market Equilibrium
Eisenberg and Gale, 1959
Fisher model, additive linear utilities
Reduced the problem to a convex optimization problem
Eaves, 1976
Linear complementarity problem
Lemke’s algorithm
Newman and Primak, 1992
Ellipsoid method – polynomial-time method
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Computation of Market Equilibrium
Devanur , Papadimitriou, Saberi, Vazirani, 2002
Fisher model, separable additive and linear utilities
Combinatorial algorithm based on max flows Complexity:
n4/ max-flow computations ~ n7/
Jain et al 2003, Devanur and Vazirani 2003
Approximation algorithm for Walrasian model, linear utilities
Jain, 2004
General Walrasian model, additive linear utilities, uses
Ellipsoid method (inequalities surprisingly similar to
Eisenberg and Gale)
Ye 2004
Interior Point method , O(n4 L)
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Computation of Market Equilibrium
Auction Algorithm [GK04a]
Linear utilities, Walrasian model
Separable Gross Substitutes [GKV04b]
Auction Algorithms for Production [KMV05]
More General Gross-Substitute Functions [GK06]
Exact Algorithms for Fisher Model [GK07]
Algorithms for Resource Allocation markets
[FGKKS08]
Auction for general production models [KS09]
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Techniques Used
Flow based Combinatorial, slow
Reduction to convex optimization problems Solves for a large class of utility functions
Little Economic interpretation
Interior point method Similar to convex optimization reductions
Greedy methods based on convex optimization problem
Auction based Simple and distributed
Fast and intuitive
Economic interpretation
Approximate
Need to be extended to more general models
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Auction Algorithms for Market
Equilibrium [GK04]
General Walrasian model
Additive linear utilities
Approximation algorithm
Decentralized and distributed
Simple
Natural auction interpretation
Complexity: 1/ n3 log vmax steps
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Price Rollbacks and Path Auctions
Fisher Model
Linear utilities
(1+) approximation
O(n3 + n2log M) log(1/)) time
Solution is rational
Exact solution in O((n3 + n2log M) L) time
Relation to max flows
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The Market Equilibrium Problem
Linear, additive utilities:
A family of linear
programs
xij is a solution to:
Markets clear:
i
m
j
jij
j
n
i
ij
epxi
axj
1
1
:
:
i
m
j
jij
m
j
ijij
epx
xv
1
1
:Subject to
:Maximize
m
j
ijiji xvxu1
)(
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Auction Mechanism
G1 has maximum utility/price for A upto $15
G1 has maximum utility/price for B
Price=$10
5units
$30
$30
Price=$10
3 units
Price=$15
2 units
$20
B
G1A
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Auction Mechanism
G1 is maximum utility/price for A upto $15
after which G2 has max utility/price for A
Price=$10
3 units
Price=$15
2 units
$20
Price=$15
3 units
$5
Price=$15
3 unit
Price=$15
2 units
$5
A
G1G1
G2 Price=$5
1 unit
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Network Optimization and Games
Multiple Path Network Routing
st
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Issues
Routing Delays
Requirement of Buffers at End/Intermediate
Nodes
Recent Work-
Multipath Routing with Bounded Buffers
(INFOCOM 2010)
Multiple Source Sink Flows with Bounded Buffers
(ICC 2010)
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Network Games
Multiple Path Network Routing
Can be modeled as a 2-player Game (Zero-
Sum)
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10/15/2010Illinois Institute of Technology 27
ABSTRACT FILE SYSTEMS
Users have a large amount of personal
files/e-mails due to increased storage space
availability for a fraction of the cost.
Most widely used organizational structure :
Hierarchical-Tree
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10/15/2010Illinois Institute of Technology 29
Limitations
A file is accessed by a unique address
known as the file path.
Organizing is done by using directories, sub-
directories, and filenames with extension.
It is not very flexible
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10/15/2010Illinois Institute of Technology 31
A methodology to extend the file organization
into a user-defined, Multi-hierarchy -
Abstract File System
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10/15/2010Illinois Institute of Technology 32
Consider the following structure of files
Pictures/2006/dad
Pictures/2005/dad
Pictures/2006/mom
Pictures/2005/mom
Pictures/2006/baby
Pictures/2005/baby
Example …
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10/15/2010Illinois Institute of Technology 33
Pictures
2005 2006
Dad Mom Baby Dad Mom Baby
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10/15/2010Illinois Institute of Technology 34
Suppose we wanted to access all files which
involve dad, i.e.
Pictures/dad
The number of files may be substantial and so it
is desired that these may be classified further
as Pictures/dad/2005
Pictures/dad/2006
Pictures/dad/baby
Pictures/dad/mom
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10/15/2010Illinois Institute of Technology 35
Pictures
Dad
2005 2006 Baby Mom
….
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10/15/2010Illinois Institute of Technology 36
We create the notion of structured keywords
and abstract directories so that files can be
organized in any user specified hierarchies.
This is akin to a hyper-edge labeled with a
hierarchical meta-label (Figure below)
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10/15/2010Illinois Institute of Technology 37
Pictures
Dad
Holiday Family Baby
Baby
2005 2006
Mom
2005 2006
Dad
2005 2006
2005 2006 Mom
2005 2006
/Dad/2006
/Dad/2005