On the Efficiency of the Proportional Allocation Mechanism for Divisible Resources

TL;DR

This paper analyzes the efficiency of the proportional allocation mechanism for divisible resources, revealing bounds on the Price of Anarchy across various equilibrium types and valuation functions, including concave, subadditive, and budget-constrained settings.

Contribution

It provides new bounds on the Price of Anarchy for Bayesian, coarse-correlated, and pure equilibria, extending understanding of the mechanism's efficiency under diverse conditions.

Findings

Bayesian Nash equilibria can be arbitrarily inefficient with concave valuations.

PoA is at most 2 for subadditive valuations, and this bound is tight.

PoA is exactly 2 for pure equilibria in polyhedral environments.

Abstract

We study the efficiency of the proportional allocation mechanism, that is widely used to allocate divisible resources. Each agent submits a bid for each divisible resource and receives a fraction proportional to her bids. We quantify the inefficiency of Nash equilibria by studying the Price of Anarchy (PoA) of the induced game under complete and incomplete information. When agents' valuations are concave, we show that the Bayesian Nash equilibria can be arbitrarily inefficient, in contrast to the well-known 4/3 bound for pure equilibria. Next, we upper bound the PoA over Bayesian equilibria by 2 when agents' valuations are subadditive, generalizing and strengthening previous bounds on lattice submodular valuations. Furthermore, we show that this bound is tight and cannot be improved by any simple or scale-free mechanism. Then we switch to settings with budget constraints, and we show an improved upper bound on the PoA over coarse-correlated equilibria. Finally, we prove that the PoA is exactly 2 for pure equilibria in the polyhedral environment.