TY - GEN
T1 - Why prices need algorithms
AU - Roughgarden, Tim
AU - Talgam-Cohen, Inbal
PY - 2015/6/15
Y1 - 2015/6/15
N2 - Understanding when equilibria are guaranteed to exist is a central theme in economic theory, seemingly unrelated to computation. This paper shows that the existence of pricing equilibria is inextricably connected to the computational complexity of related optimization problems: demand oracles, revenue-maximization, and welfare-maximization. This relationship implies, under suitable complexity assumptions, a host of impossibility results. We also suggest a complexity-theoretic explanation for the lack of useful extensions of the Walrasian equilibrium concept: such extensions seem to require the invention of novel polynomial-time algorithms for welfare-maximization.
AB - Understanding when equilibria are guaranteed to exist is a central theme in economic theory, seemingly unrelated to computation. This paper shows that the existence of pricing equilibria is inextricably connected to the computational complexity of related optimization problems: demand oracles, revenue-maximization, and welfare-maximization. This relationship implies, under suitable complexity assumptions, a host of impossibility results. We also suggest a complexity-theoretic explanation for the lack of useful extensions of the Walrasian equilibrium concept: such extensions seem to require the invention of novel polynomial-time algorithms for welfare-maximization.
KW - Complexity
KW - Computational game theory
KW - Equilibrium computation
KW - Market design
KW - Market equilibrium
UR - http://www.scopus.com/inward/record.url?scp=84962061422&partnerID=8YFLogxK
U2 - 10.1145/2764468.2764515
DO - 10.1145/2764468.2764515
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AN - SCOPUS:84962061422
T3 - EC 2015 - Proceedings of the 2015 ACM Conference on Economics and Computation
SP - 19
EP - 36
BT - EC 2015 - Proceedings of the 2015 ACM Conference on Economics and Computation
PB - Association for Computing Machinery, Inc
T2 - 16th ACM Conference on Economics and Computation, EC 2015
Y2 - 15 June 2015 through 19 June 2015
ER -