A Game Theoretic View of Efficiency Loss in Resource Allocation

Motivated by resource allocation problems in communication networks as well as power systems, we consider the design of market mechanisms for such settings which are robust to gaming behavior by market participants. Recent results in this work are reviewed, including: (1) efficiency loss guarantees for a data rate allocation mechanism first proposed by Kelly, both when link capacities are fixed and when they are elastic; (2) characterization of mechanisms that minimize the efficiency loss, within a certain class of “simple” mechanisms; (3) extensions to general networks; and (4) mechanism design for supply function bidding in electric power systems.

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