Computing the Equilibria of Bimatrix Games using Dominance Heuristics

We propose a formulation of a general-sum bimatrix game as a bipartite directed graph with the objective of establishing a correspondence between the set of the relevant structures of the graph (in particular elementary cycles) and the set of the Nash equilibria of the game. We show that finding the set of elementary cycles of the graph permits the computation of the set of equilibria. For games whose graphs have a sparse adjacency matrix, this serves as a good heuristic for computing the set of equilibria. The heuristic also allows the discarding of sections of the support space that do not yield any equilibrium, thus serving as a useful pre-processing step for algorithms that compute the equilibria through support enumeration

Tie-Breaking Rules and Divisibility in Experimental Duopoly Markets

This experimental study investigates pricing behavior of sellers in duopoly markets with posted prices and market power. The two treatment variables are given by tie breaking rules and divisibility of the price space. The first treatment variable deals with the rule under which demanded units are allocated between sellers in case of a price tie. A change in divisibility is modeled by making the sellers' price space finer or coarser. The main finding is that the incidence of perfect collusion is significantly higher under the sharing tie breaking rule than under the random (coin-toss) one, especially when the price space is less divisible.Collusion, Tie Breaking Rules, Divisibility, Bertrand model

Tie-Breaking Rules and Divisibility in Experimental Duopoly Markets

We investigate pricing behavior of sellers in duopoly markets with posted prices and market power. The two treatment variables are given by tie-breaking rules and divisibility of the price space. The first treatment variable deals with the rule under which demanded units are allocated between sellers in case of a price tie. A change in divisibility is modeled by making the sellers’ price space finer or coarser. We find that the incidence of perfect collusion is significantly higher under the sharing tie-breaking rule than under the random (coin-toss) one, especially when the price space is less divisible.Collusion; Tie-breaking rules; Divisibility; Bertrand model

Exponentially many steps for finding a Nash equilibrium in a bimatrix game

The Lemke–Howson algorithm is the classical algorithm for the problem NASH of finding one Nash equilibrium of a bimatrix game. It provides a constructive, elementary proof of existence of an equilibrium, by a typical “directed parity argument”, which puts NASH into the complexity class PPAD. This paper presents a class of bimatrix games for which the Lemke–Howson algorithm takes, even in the best case, exponential time in the dimension d of the game, requiring ­((µ3=4)d) many steps, where µ is the Golden Ratio. The “parity argument” for NASH is thus explicitly shown to be inefficient. The games are constructed using pairs of dual cyclic polytopes with 2d suitably labeled facets in d-space

Finding Nash equilibria of bimatrix games

This thesis concerns the computational problem of finding one Nash equilibrium of a bimatrix game, a two-player game in strategic form. Bimatrix games are among the most basic models in non-cooperative game theory, and finding a Nash equilibrium is important for their analysis. The Lemke—Howson algorithm is the classical method for finding one Nash equilib-rium of a bimatrix game. In this thesis, we present a class of square bimatrix games for which this algorithm takes, even in the best case, an exponential number of steps in the dimension d of the game. Using polytope theory, the games are constructed using pairs of dual cyclic polytopes with 2d suitably labelled facets in d-space. The construc-tion is extended to two classes of non-square games where, in addition to exponentially long Lemke—Howson computations, finding an equilibrium by support enumeration takes exponential time on average. The Lemke—Howson algorithm, which is a complementary pivoting algorithm, finds at least one solution to the linear complementarity problem (LCP) derived from a bimatrix game. A closely related complementary pivoting algorithm by Lemke solves more general LCPs. A unified view of these two algorithms is presented, for the first time, as far as we know. Furthermore, we present an extension of the standard version of Lemke's algorithm that allows one more freedom than before when starting the algorithm

IST Austria Thesis

A search problem lies in the complexity class FNP if a solution to the given instance of the problem can be verified efficiently. The complexity class TFNP consists of all search problems in FNP that are total in the sense that a solution is guaranteed to exist. TFNP contains a host of interesting problems from fields such as algorithmic game theory, computational topology, number theory and combinatorics. Since TFNP is a semantic class, it is unlikely to have a complete problem. Instead, one studies its syntactic subclasses which are defined based on the combinatorial principle used to argue totality. Of particular interest is the subclass PPAD, which contains important problems like computing Nash equilibrium for bimatrix games and computational counterparts of several fixed-point theorems as complete. In the thesis, we undertake the study of averagecase hardness of TFNP, and in particular its subclass PPAD. Almost nothing was known about average-case hardness of PPAD before a series of recent results showed how to achieve it using a cryptographic primitive called program obfuscation. However, it is currently not known how to construct program obfuscation from standard cryptographic assumptions. Therefore, it is desirable to relax the assumption under which average-case hardness of PPAD can be shown. In the thesis we take a step in this direction. First, we show that assuming the (average-case) hardness of a numbertheoretic problem related to factoring of integers, which we call Iterated-Squaring, PPAD is hard-on-average in the random-oracle model. Then we strengthen this result to show that the average-case hardness of PPAD reduces to the (adaptive) soundness of the Fiat-Shamir Transform, a well-known technique used to compile a public-coin interactive protocol into a non-interactive one. As a corollary, we obtain average-case hardness for PPAD in the random-oracle model assuming the worst-case hardness of #SAT. Moreover, the above results can all be strengthened to obtain average-case hardness for the class CLS ⊆ PPAD. Our main technical contribution is constructing incrementally-verifiable procedures for computing Iterated-Squaring and #SAT. By incrementally-verifiable, we mean that every intermediate state of the computation includes a proof of its correctness, and the proof can be updated and verified in polynomial time. Previous constructions of such procedures relied on strong, non-standard assumptions. Instead, we introduce a technique called recursive proof-merging to obtain the same from weaker assumptions