2 research outputs found
Optimal Resource Allocation over Networks via Lottery-Based Mechanisms
We show that, in a resource allocation problem, the ex ante aggregate utility
of players with cumulative-prospect-theoretic preferences can be increased over
deterministic allocations by implementing lotteries. We formulate an
optimization problem, called the system problem, to find the optimal lottery
allocation. The system problem exhibits a two-layer structure comprised of a
permutation profile and optimal allocations given the permutation profile. For
any fixed permutation profile, we provide a market-based mechanism to find the
optimal allocations and prove the existence of equilibrium prices. We show that
the system problem has a duality gap, in general, and that the primal problem
is NP-hard. We then consider a relaxation of the system problem and derive some
qualitative features of the optimal lottery structure