Flow Allocation Games

We study a game-theoretic variant of the maximum circulation problem. In a flow allocation game, we are given a directed flow network. Each node is a rational agent and can strategically allocate any incoming flow to the outgoing edges. Given the strategy choices of all agents, a maximal circulation...

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Bibliographic Details
Published inarXiv.org
Main Authors Bertschinger, Nils, Hoefer, Martin, Schmand, Daniel
Format Paper
LanguageEnglish
Published Ithaca Cornell University Library, arXiv.org 21.12.2023
Subjects
Computation
Equilibrium
Game theory
Graph theory
Liability
Polynomials
Regulation of financial institutions
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Summary:We study a game-theoretic variant of the maximum circulation problem. In a flow allocation game, we are given a directed flow network. Each node is a rational agent and can strategically allocate any incoming flow to the outgoing edges. Given the strategy choices of all agents, a maximal circulation that adheres to the chosen allocation strategies evolves in the network. Each agent wants to maximize the amount of flow through her node. Flow allocation games can be used to express strategic incentives of clearing in financial networks. We provide a cumulative set of results on the existence and computational complexity of pure Nash and strong equilibria, as well as tight bounds on the (strong) prices of anarchy and stability. Our results show an interesting dichotomy: Ranking strategies over individual flow units allow to obtain optimal strong equilibria for many objective functions. In contrast, more intuitive ranking strategies over edges can give rise to unfavorable incentive properties.
ISSN:2331-8422