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CIM's 20th Anniversary Seminar Series

Asymptotics of Efficiency Loss in Competitive Market Mechanisms

Jia Yuan Yu < >
PhD Student, Dept. ECE McGill University

November 25, 2005 at  11:00 AM
Zames Seminar Room - MC437

Decentralized control mechanisms for networks have the objective of maximizing social welfare in the face of heterogeneous demand and lack of coordination among agents. We will look at the efficiency loss, in terms of social welfare, between the best-centralized resource allocation mechanism and a simple decentralized one introduced by Kelly. A tight bound on this efficiency loss exists in the most general set-up. We will present stronger asymptotic and convergence rate results for large and heterogeneous populations of users.

In particular, we will show that the loss of efficiency tends to zero with high probability under some standard assumptions. If, however, the assumption of bounded utility functions is relaxed, the loss of efficiency no longer converges to zero. Collaborating simulation results are also presented.