Efficiency and braess' paradox under pricing in general network

Thesis (S.M.)--Massachusetts Institute of Technology, Dept. of Electrical Engineering and Computer Science, 2005.Includes bibliographical references (p. 79-82).Today's large scale networks such as the Internet emerge from the interconnection of privately owned networks and serve heterogeneous users with different service needs. The service providers of these networks are interested in maximizing their profit. Since the existing pricing scheme cannot satisfy their needs, the service providers are looking for new pricing mechanisms. However, designing a for-profit pricing scheme is not a trivial task. The network contains millions of users who have their own interests and they react differently to price. Given such variety, how should the service providers charge the network resources to maximize their profit? In the presence of profit maximizing price, how should we allocate resources among these heterogeneous users? Will the resulting system suffer from efficiency loss? In this thesis, we will study these fundamental questions of profit maximizing price. We make three main contributions: First, we develop a framework to study profit maximizing prices in a general congested network. We study the flow control and routing decisions of self-interested users in the present of profit maximizing price. We define an equilibrium of the user choices and the monopoly equilibrium (ME) as the equilibrium prices set by the service provider and the corresponding user equilibrium.(cont.) Second, we use the framework to analyze the networks containing different types of user utilities: elastic or inelastic. For a network containing inelastic user utilities, we show that the flow allocations at the ME and the social optimum are the same. For a network containing elastic user utilities, we explicitly characterize the ME and study its performance relative to the user equilibrium at 0 prices and the social optimum that would result from centrally maximizing the aggregate system utility. Third, we define Braess' Paradox for a network involving pricing and show that Braess' Paradox does not occur under monopoly prices.by Xin Huang.S.M

Reducing urban traffic congestion due to localized routing decisions

Balancing traffic flow by influencing drivers' route choices to alleviate congestion is becoming increasingly more appealing in urban traffic planning. Here, we introduce a discrete dynamical model comprising users who make their own routing choices on the basis of local information and those who consider routing advice based on localized inducement. We identify the formation of traffic patterns, develop a scalable optimization method for identifying control values used for user guidance, and test the effectiveness of these measures on synthetic and real-world road networks

HOW DOES CONGESTION MATTER FOR JAKARTA’S CITIZENS?

Jakarta, as the biggest city in Indonesia, faces many problems, one of which is congestion, that produces a high cost economy. It is predicted that if the government does not take immediate action to solve this problem, there will be a potential loss of IDR65 trillion by 2020 (Bappenas, 2007). This consists of IDR28.1 trillion in operational costs and IDR36.9 trillion in opportunity costs from time lost. This study is aimed at estimating how much Jakarta citizens’ are willing to pay to overcome the congestion problem. By using the stated preference method, the estimation result shows that the annual cost of congestion in Jakarta is estimated at IDR50.2 trillion a year. Furthermore, this result can be used as a baseline for a cost-benefit analysis by the government to generate a better public transportation policy in Jakarta.Keywords: willingness to pay, congestion, stated preference method, conditional logi

Game Theory Relaunched

The game is on. Do you know how to play? Game theory sets out to explore what can be said about making decisions which go beyond accepting the rules of a game. Since 1942, a well elaborated mathematical apparatus has been developed to do so; but there is more. During the last three decades game theoretic reasoning has popped up in many other fields as well - from engineering to biology and psychology. New simulation tools and network analysis have made game theory omnipresent these days. This book collects recent research papers in game theory, which come from diverse scientific communities all across the world; they combine many different fields like economics, politics, history, engineering, mathematics, physics, and psychology. All of them have as a common denominator some method of game theory. Enjoy

Measuring Risk In Networks

Participation in networks inevitably involves risk. However, the study of networks has, perhaps surprisingly, not had much to say about network risk in the sense that most economists would use the term ‘risk.’ No consensus has even emerged on what such a model would constitute. Network risk appears to be present in the world, whether in the financial sector, in transportation, or with regards to interpersonal connections, and yet we have few tools for modeling it. The primary contribution of this thesis is a formal notion of network risk, and a set of tools for measuring it

Harnessing Big Data for the Sharing Economy in Smart Cities

Motivated by the imbalance between demand (i.e., passenger requests) and supply (i.e., available vehicles) in the ride-hailing market and severe traffic congestion faced by modern cities, this dissertation aims to improve the efficiency of the sharing economy by building an agent-based methodological framework for optimal decision-making of distributed agents (e.g., autonomous shared vehicles), including passenger-seeking and route choice. Furthermore, noticing that city planners can impact the behavior of agents via some operational measures such as congestion pricing and signal control, this dissertation investigates the overall bilevel problem that involves the decision-making process of both distributed agents (i.e., the lower level) and central city planners (i.e., the upper level). First of all, for the task of passenger-seeking, this dissertation proposes a model-based Markov decision process (MDP) approach to incorporate distinct features of e-hailing drivers. The modified MDP approach is found to outperform the baseline (i.e., the local hotspot strategy) in terms of both the rate of return and the utilization rate. Although the modified MDP approach is set up in the single-agent setting, we extend its applicability to multi-agent scenarios by a dynamic adjustment strategy of the order matching probability which is able to partially capture the competition among agents. Furthermore, noticing that the reward function is commonly assumed as some prior knowledge, this dissertation unveils the underlying reward function of the overall e-hailing driver population (i.e., 44,000 Didi drivers in Beijing) through an inverse reinforcement learning method, which paves the way for future research on discovering the underlying reward mechanism in a complex and dynamic ride-hailing market. To better incorporate the competition among agents, this dissertation develops a model-free mean-field multi-agent actor-critic algorithm for multi-driver passenger-seeking. A bilevel optimization model is then formulated with the upper level as a reward design mechanism and the lower level as a multi-agent system. We use the developed mean field multi-agent actor-critic algorithm to solve for the optimal passenger-seeking policies of distributed agents in the lower level and Bayesian optimization to solve for the optimal control of upper-level city planners. The bilevel optimization model is applied to a real-world large-scale multi-class taxi driver repositioning task with congestion pricing as the upper-level control. It is disclosed that the derived optimal toll charge can efficiently improve the objective of city planners. With agents knowingwhere to go (i.e., passenger-seeking), this dissertation then applies the bilevel optimization model to the research question of how to get there (i.e., route choice). Different from the task of passenger-seeking where the action space is always fixed-dimensional, the problem of variable action set emerges in the task of route choice. Therefore, a flow-dependent deep Q-learning algorithm is proposed to efficiently derive the optimal policies for multi-commodity multi-class agents. We demonstrate the effect of two countermeasures, namely tolling and signal control, on the behavior of travelers and show that the systematic objective of city planners can be optimized by a proper control

Routing choices in intelligent transport systems

Road congestion is a phenomenon that can often be avoided; roads become popular, travel times increase, which could be mitigated with better coordination mechanisms. The choice of route, mode of transport, and departure time all play a crucial part in controlling congestion levels. Technology, such as navigation applications, have the ability to influence these decisions and play an essential role in congestion reduction. To predict vehicles' routing behaviours, we model the system as a game with rational players. Players choose a path between origin and destination nodes in a network. Each player seeks to minimise their own journey time, often leading to inefficient equilibria with poor social welfare. Traffic congestion motivates the results in this thesis. However, the results also hold true for many other applications where congestion occurs, e.g. power grid demand. Coordinating route selection to reduce congestion constitutes a social dilemma for vehicles. In sequential social dilemmas, players' strategies need to balance their vulnerability to exploitation from their opponents and to learn to cooperate to achieve maximal payouts. We address this trade-off between mathematical safety and cooperation of strategies in social dilemmas to motivate our proposed algorithm, a safe method of achieving cooperation in social dilemmas, including route choice games. Many vehicles use navigation applications to help plan their journeys, but these provide only partial information about the routes available to them. We find a class of networks for which route information distribution cannot harm the receiver's expected travel times. Additionally, we consider a game where players always follow the route chosen by an application or where vehicle route selection is controlled by a route planner, such as autonomous vehicles. We show that having multiple route planners controlling vehicle routing leads to inefficient equilibria. We calculate the Price of Anarchy (PoA) for polynomial function travel times and show that multiagent reinforcement learning algorithms suffer from the predicted Price of Anarchy when controlling vehicle routing. Finally, we equip congestion games with waiting times at junctions to model the properties of traffic lights at intersections. Here, we show that Braess' paradox can be avoided by implementing traffic light cycles and establish the PoA for realistic waiting times. By employing intelligent traffic lights that use myopic learning, such as multi-agent reinforcement learning, we prove a natural reward function guarantees convergence to equilibrium. Moreover, we highlight the impact of multi-agent reinforcement learning traffic lights on the fairness of journey times to vehicles

Selfish versus coordinated routing in network games

Thesis (Ph. D.)--Massachusetts Institute of Technology, Sloan School of Management, Operations Research Center, 2004.Includes bibliographical references (p. 159-170) and index.This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections.A common assumption in network optimization models is that a central authority controls the whole system. However, in some applications there are independent users, and assuming that they will follow directions given by an authority is not realistic. Individuals will only accept directives if they are in their own interest or if there are incentives that encourage them to do so. Actually, it would be much easier to let users make their own decisions hoping that the outcome will be close to the authority's goals. Our main contribution is to show that, in static networks subject to congestion, users' selfish decisions drive the system close to optimality with respect to various common objectives. This connection to individual decision making proves fruitful; not only does it provide us with insights and additional understanding of network problems, but it also allows us to design approximation algorithms for computationally difficult problems. More specifically, the conflicting objectives of the users prompt the definition of a network game in which they minimize their own latencies. We show that the so-called price of anarchy is small in a quite general setting. Namely, for networks with side constraints and non-convex, non-differentiable, and even discontinuous latency functions, we show that although an arbitrary equilibrium need not be efficient, the total latency of the best equilibrium is close to that of an optimal solution. In addition, when the measure of the solution quality is the maximum latency, equilibria in networks without constraints are also near-optimal. We provide the first analysis of the problem of minimizing that objective in static networks with congestion.(cont.) As this problem is NP-hard, computing an equilibrium represents a constant-factor approximation algorithm. In some situations, the network authority might still want to do better than in equilibrium. We propose to use a solution that minimizes the total latency, subject to constraints designed to improve the solution's fairness. For several real-world instances, we compute traffic assignments of notably smaller total latency than an equilibrium, yet of similar fairness. Furthermore, we provide theoretical results that explain the conclusions derived from the computational study.by Nicolás E. Stier-Moses.Ph.D