Optimal Resource Allocation over Networks via Lottery-Based Mechanisms
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.
Keywords
Cite
@article{arxiv.1812.00501,
title = {Optimal Resource Allocation over Networks via Lottery-Based Mechanisms},
author = {Soham R. Phade and Venkat Anantharam},
journal= {arXiv preprint arXiv:1812.00501},
year = {2020}
}