Utility Design for Distributed Resource Allocation—Part I: Characterizing and Optimizing the Exact Price of Anarchy

Game theory has emerged as a fruitful paradigm for the design of networked multiagent systems. A fundamental component of this approach is the design of agents’ utility functions so that their self-interested maximization results in a desirable collective behavior. In this article, we focus on a well-studied class of distributed resource allocation problems, where each agent is requested to select a subset of resources with the goal of optimizing a given system-level objective. Our core contribution is the development of a novel framework to tightly characterize the worst-case performance of any resulting Nash equilibrium (price of anarchy) as a function of the chosen agents’ utility functions. Leveraging this result, we identify how to design such utilities so as to optimize the price of anarchy through a tractable linear program. This provides us with a priori performance certificates applicable to any existing learning algorithm capable of driving the system to an equilibrium. Part II of this article specializes these results to submodular and supermodular objectives, discusses the complexity of computing Nash equilibria, and provides multiple illustrations of the theoretical findings.