ITR: Networks of Strategic Agents: Theory and Algorithms

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Networks of interacting agents play a fundamental role in manydomains, ranging from physical communication networks such as theInternet to social networks arising from relationships between people.These networks grow and evolve through interactions of large numbersof participants, yielding complex global structure and dynamics.Often this leads to systems that function efficiently and reliably;but in other, seemingly similar settings, networks can exhibit latentinefficiency or cascading failures. Such failures occur not only inphysical networks but also in social ones, as illustrated by recentfinancial crises which propagated through networks of relationships and trust.Despite considerable interest in these topics, the research communityis only beginning to understand the behavior of networks such asthese; small variations in the incentives, information, andcomputational power possessed by the agents in a network can haveprofound effects on network behavior, yet the principles underlyingthese effects remain elusive. This project develops theoretical and algorithmic underpinnings of networksthat arise from the interaction of strategic agents. By combininggame-theoretic approaches with computational models of interactingagents, the work develops models that are richer andmore informative than either those that consider strategic agents inthe absence of interaction networks or those that consider networkstructure in the absence of game-theoretic models of the agents.Networks of strategic agents are investigated at several different levels, extending from questions of structure to those of function and behavior. One of the project's central goals is to examine theinter-relationships between these three levels. In contrast, mostcurrent techniques are tuned to a single level in isolation, withwork in computer science and mathematics focusing primarily on structure and work in economics emphasizing strategic behavior.The project's inter-disciplinary nature exposes similarities betweenquestions in communication networks, including the Internet, andthose arising in social networks, such as trust in markets. Beyond analyzing questions arising from these networks in general,a particular goal is to better understand thenetworks of interactions underlying electronic markets. Indeed, while it was widely predicted that such marketplaces would revolutionize trading of goods and services, very few have survived.The project participants contribute expertise from several perspectives. They have made some of the fundamental contributions toalgorithmic game theory, computational and economic analysis ofinteracting agents, and models for complex networks, as well as to theunderstanding of market microstructure and the design of electronic markets.Further, the investigators have been key participants in the new Information Science program at Cornell. This program seeks to broaden the reach of computationalideas by attracting students from non-technical backgrounds, andincorporating notions of computation as a human-centered activitythat is intrinsically embedded in social, legal, and economic contexts. The scientific results of the project supportthe intellectual underpinnings of this program at boththe graduate and undergraduate levels.Many of the models involved in the research have an immediate intuitive appeal, and are well suited to interactive graphical demonstrations.These demonstrations can be used to broaden general understanding of the nature of strategic interaction and its networked character, and can be made broadly available through the National Science Digital Library (NSDL) where appropriate to pre-collegiate educational levels.The Internet is but the newest of many networks of strategic agents.However, it has served to change the structure and function of othernetworks, as it enables instantaneous, always-on, global communication. Understanding the theoretical underpinnings of thesechanges can provide important societal benefits in terms of moresecure, stable communication and economic systems.