Strategic decentralization in binary choice composite congestion games

TL;DR

This paper analyzes how strategic decentralization affects equilibrium outcomes in binary choice composite congestion games, revealing that decentralization can benefit the decentralizing player but may harm overall social welfare.

Contribution

It introduces the concept of optimal unilateral decentralization strategies and compares their effects to Stackelberg leadership in congestion games.

Findings

Atomic splittable players have optimal decentralization strategies.

Decentralization provides similar benefits as Stackelberg leadership.

Decentralization can increase social costs and negatively impact other players.

Abstract

This paper studies strategic decentralization in binary choice composite network congestion games. A player decentralizes if she lets some autonomous agents to decide respectively how to send different parts of her stock from the origin to the destination. This paper shows that, with convex, strictly increasing and differentiable arc cost functions, an atomic splittable player always has an optimal unilateral decentralization strategy. Besides, unilateral decentralization gives her the same advantage as being the leader in a Stackelberg congestion game. Finally, unilateral decentralization of an atomic player has a negative impact on the social cost and on the costs of the other players at the equilibrium of the congestion game.