Price of Anarchy and Its Applications

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Proposal Abstract ?Price of Anarchy? and its ApplicationsGeorgia PerakisMITThis grant provides funding in order to investigate the ?Price of Anarchy? (loss of efficiency in terms of the overall system objective) due to competition. The goal is to understand the impact of competition in a unifying way in order to encompass various realistic settings, understand its implications in a variety of applications and propose ways to remedy inefficiencies. In particular, this proposal aspires to provide a unifying framework for measuring the loss of efficiency in the presence of competition in a variety of application areas. The proposal wishes to encompass competition in non-atomic versus atomic games as well as in cost minimization versus profit maximization games. The goal is to consider a variety of applications areas such as oligopolistic competition through pricing or quantity setting as well as in transportation.If successful, the results of this project will enhance our ability to understand the effects of competition and identify the key drivers that can help us reduce inefficiencies. This research intends to impact application areas such as pricing/revenue management, supply chains and transportation. It will provide a deeper understanding of the underlying structure in competitive settings and highlight the underlying factors that can reduce inefficiencies due to competition. Furthermore, this project has the goal (through the imposition of tolls, contracts and pricing mechanisms) to impact many important application arenas by reducing inefficiencies due to competition. This research will draw upon a broad collection of methodologies including all aspects of mathematical optimization, simulation, matrix analysis and many aspects of game theory. From an educational perspective, the results of this project will serve as components in teaching modules at MIT. These include modules in core courses the PI has already been one of the key contributors. This project lends itself ideally to mentoring undergraduate and graduate students.