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Internalization of social cost in congestion games

Author

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  • Igal Milchtaich

    (Bar-Ilan University)

Abstract

Congestion models may be studied from either the users’ point of view or the social one. The first perspective examines the incentives of individual users, who are only interested in their own, personal payoff or cost and ignore the negative externalities that their choice of resources creates for the other users. The second perspective concerns social goals such as the minimization of the mean travel time in a transportation network. This paper studies a more general setting, in which individual users attach to the social cost some weight r that is not necessarily 0 or 1. It examines the comparative statics question of whether higher r necessarily means higher social welfare at equilibrium.

Suggested Citation

  • Igal Milchtaich, 2021. "Internalization of social cost in congestion games," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 71(2), pages 717-760, March.
    • Handle: RePEc:spr:joecth:v:71:y:2021:i:2:d:10.1007_s00199-020-01274-0
    DOI: 10.1007/s00199-020-01274-0
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    References listed on IDEAS

    as
    1. Kuniavsky, Sergey & Smorodinsky, Rann, 2013. "Greediness and equilibrium in congestion games," Economics Letters, Elsevier, vol. 121(3), pages 499-503.
    2. Igal Milchtaich, 2015. "Network topology and equilibrium existence in weighted network congestion games," International Journal of Game Theory, Springer;Game Theory Society, vol. 44(3), pages 515-541, August.
    3. Epstein, Amir & Feldman, Michal & Mansour, Yishay, 2009. "Efficient graph topologies in network routing games," Games and Economic Behavior, Elsevier, vol. 66(1), pages 115-125, May.
    4. Igal Milchtaich, 2013. "Representation of finite games as network congestion games," International Journal of Game Theory, Springer;Game Theory Society, vol. 42(4), pages 1085-1096, November.
    5. Milchtaich, Igal, 2012. "Comparative statics of altruism and spite," Games and Economic Behavior, Elsevier, vol. 75(2), pages 809-831.
    6. Roberto Cominetti & José R. Correa & Nicolás E. Stier-Moses, 2009. "The Impact of Oligopolistic Competition in Networks," Operations Research, INFORMS, vol. 57(6), pages 1421-1437, December.
    7. Holzman, Ron & Law-Yone, Nissan, 1997. "Strong Equilibrium in Congestion Games," Games and Economic Behavior, Elsevier, vol. 21(1-2), pages 85-101, October.
    8. Holzman, Ron & Law-yone (Lev-tov), Nissan, 2003. "Network structure and strong equilibrium in route selection games," Mathematical Social Sciences, Elsevier, vol. 46(2), pages 193-205, October.
    9. Aviad Heifetz & Chris Shannon & Yossi Spiegel, 2007. "The Dynamic Evolution of Preferences," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 32(2), pages 251-286, August.
    10. Milchtaich, Igal, 2004. "Social optimality and cooperation in nonatomic congestion games," Journal of Economic Theory, Elsevier, vol. 114(1), pages 56-87, January.
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    More about this item

    Keywords

    Social cost; Congestion games; Altruism; Price of anarchy; Stability of equilibrium; Potential games;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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