Friday, October 26th, 2012 | 2:30pm-3:30pm | MC 103 |

Computer Science, Stanford University

Porting the Computer Science Toolbox to Game Theory and Economics (SOCS Colloquium)

Theoretical computer science has brought new ideas and techniques to game and economic theory. A primary signature of the computer science approach is {em approximation} --- the idea of building credibility for a proposed solution by proving that its performance is always within a small factor of an ideal (and typically unimplementable) solution. We explain two of our recent contributions in this area, one motivated by networks and one by auctions. We first discuss the "price of anarchy": how well does decentralized (or "selfish") behavior approximates centralized optimization? This concept has been analyzed in many applications, including network routing, resource allocation, network formation, health care, and even models of basketball. We highlight a new theory of robust price of anarchy bounds, which apply even to systems that are not in equilibrium. Second, we consider auction design: for example, what selling procedure should be used to maximize the revenue of a seller? On the analysis side, we highlight a new framework that explicitly connects average-case (i.e., Bayesian) analysis, the dominant paradigm in economics, with the worst-case analysis approach common in computer science. On the design side, we provide a distribution-independent auction that performs, for a wide class of input distributions, almost as well as the distribution-specific optimal auction.