Enforcing efficient equilibria in network design games via subsidies
Proceedings of the twenty-fourth annual ACM symposium on Parallelism in algorithms and architectures
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We consider a cost sharing system where users are selfish and act according to their own interest. There is a set of facilities and each facility provides services to a subset of the users. Each user is interested in purchasing a service, and will buy it from the facility offering it at the lowest cost. The overall system performance is defined to be the total cost of the facilities chosen by the users. A central authority can encourage the purchase of services by offering subsidies that reduce their price, in order to improve the system performance. The subsidies are financed by taxes collected from the users. Specifically, we investigate a non-cooperative game, where users join the system, and act according to their best response. We model the system as an instance of a set cover game, where each element is interested in selecting a cover minimizing its payment. The subsidies are updated dynamically, following the selfish moves of the elements and the taxes collected due to their payments. Our objective is to design a dynamic subsidy mechanism that improves on the overall system performance while collecting as taxes only a small fraction of the sum of the payments of the users. The performance of such a subsidy mechanism is thus defined by two different quality parameters: (i) the price of anarchy, defined as the ratio between the cost of the Nash equilibrium obtained and the cost of an optimal solution; and (ii) the taxation ratio, defined as the fraction of payments collected as taxes from the users. We investigate two different models: (i) an integral model in which each element is covered by a single set; and (ii) a fractional model in which an element can be fractionally covered by several sets. Let f denote the maximum number of sets that an element can belong to. For the fractional model, we provide a subsidy mechanism such that, for any ε≤1, the price of anarchy is $O(\frac{\log f}{\epsilon})$and the taxation ratio is ε. For the integral model, we provide a subsidy mechanism such that, for any ε≤1, the price of anarchy is $O(\frac{\log f\log (\frac{n}{\epsilon})}{\epsilon})$and the taxation ratio is ε, where n is the number of elements.