How profitable are strategic behaviors in a market?

Ning Chen, Xiaotie Deng, Jie Zhang

Research output: Chapter in Book/Report/Conference proceedingChapter in a published conference proceeding

31 Citations (SciVal)

Abstract

It is common wisdom that individuals behave strategically in economic environments. We consider Fisher markets with Leontief utilities and study strategic behaviors of individual buyers in market equilibria. While simple examples illustrate that buyers do get larger utilities when behaving strategically, we show that the benefits can be quite limited: We introduce the concept of incentive ratio to capture the extent to which utility can be increased by strategic behaviors of an individual, and show that the incentive ratio of Leontief markets is less than 2. We also reveal that the incentive ratios are insensitive to market sizes. Potentially, the concept incentive ratio can have applications in other strategic settings as well.
Original languageEnglish
Title of host publicationAlgorithms - ESA 2011
EditorsC. Demetrescu, M.M. Halldorsson
PublisherSpringer
Pages106-118
Number of pages13
ISBN (Electronic)978-3-642-23719-5
ISBN (Print)978-3-642-23718-8
DOIs
Publication statusPublished - 31 Dec 2011

Publication series

NameLecture Notes in Computer Science
PublisherSpringer
Volume6942
ISSN (Print)0302-9743
ISSN (Electronic)1611-3349

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