Why prices need algorithms

Tim Roughgarden, Inbal Talgam-Cohen

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

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.

Original languageEnglish
Title of host publicationEC 2015 - Proceedings of the 2015 ACM Conference on Economics and Computation
Pages19-36
Number of pages18
ISBN (Electronic)9781450334105
DOIs
StatePublished - 15 Jun 2015
Externally publishedYes
Event16th ACM Conference on Economics and Computation, EC 2015 - Portland, United States
Duration: 15 Jun 201519 Jun 2015

Publication series

NameEC 2015 - Proceedings of the 2015 ACM Conference on Economics and Computation

Conference

Conference16th ACM Conference on Economics and Computation, EC 2015
Country/TerritoryUnited States
CityPortland
Period15/06/1519/06/15

Keywords

  • Complexity
  • Computational game theory
  • Equilibrium computation
  • Market design
  • Market equilibrium

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Statistics and Probability
  • Computer Science (miscellaneous)
  • Computational Mathematics
  • Marketing

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