Leontief economies encode nonzero sum two-player games

  • Authors:

  • Bruno Codenotti;Amin Saberi;Kasturi Varadarajan;Yinyu Ye

  • Affiliations:

  • IIT-CNR, Pisa, Italy;Stanford University, Stanford CA;The University of Iowa, Iowa City IA;Stanford University, Stanford CA

  • Venue:
  • SODA '06 Proceedings of the seventeenth annual ACM-SIAM symposium on Discrete algorithm
  • Year:
  • 2006

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Abstract

We consider Leontief exchange economies, i.e., economies where the consumers desire goods in fixed proportions. Unlike bimatrix games, such economies are not guaranteed to have equilibria in general. On the other hand, they include suitable restricted versions which always have equilibria.We give a reduction from two-player games to a special family of Leontief exchange economies, which are guaranteed to have equilibria, with the property that the Nash equilibria of any game are in one-to-one correspondence with the equilibria of the corresponding economy.Our reduction exposes a potential hurdle inherent in solving certain families of market equilibrium problems: finding an equilibrium for Leontief economies (where an equilibrium is guaranteed to exist) is at least as hard as finding a Nash equilibrium for two-player nonzero sum games.As a corollary of the one-to-one correspondence, we obtain a number of hardness results for questions related to the computation of market equilibria, using results already established for games [17]. In particular, among other results, we show that it is NP-hard to say whether a particular family of Leontief exchange economies, that is guaranteed to have at least one equilibrium, has more than one equilibrium.Perhaps more importantly, we also prove that it is NP-hard to decide whether a Leontief exchange economy has an equilibrium. This fact should be contrasted against the known PPAD-completeness result of [30], which holds when the problem satisfies some standard sufficient conditions that make it equivalent to the computational version of Brouwer's Fixed Point Theorem.On the algorithmic side, we present an algorithm for finding an approximate equilibrium for some special Leontief economies, which achieves quasi-polynomial time whenever each trader does not demand too much more of any good than some other good.