The Incentive Ratio in Exchange Economies
Computer Science and Game Theory
2017-05-01 v4
Abstract
The incentive ratio measures the utility gains from strategic behaviour. Without any restrictions on the setup, ratios for linear, Leontief and Cobb-Douglas exchange markets are unbounded, showing that manipulating the equilibrium is a worthwhile endeavour, even if it is computationally challenging. Such unbounded improvements can be achieved even if agents only misreport their utility functions. This provides a sharp contrast with previous results from Fisher markets. When the Cobb-Douglas setup is more restrictive, the maximum utility gain is bounded by the number of commodities. By means of an example, we show that it is possible to exceed a known upper bound for Fisher markets in exchange economies.
Keywords
Cite
@article{arxiv.1609.02423,
title = {The Incentive Ratio in Exchange Economies},
author = {Ido Polak},
journal= {arXiv preprint arXiv:1609.02423},
year = {2017}
}