An exact solution method for binary equilibrium problems with compensation and the power market uplift problem

We propose a novel method to find Nash equilibria in games with binary decision variables by including compensation payments and incentive-compatibility constraints from non-cooperative game theory directly into an optimization framework in lieu of using first order conditions of a linearization, or relaxation of integrality conditions. The reformulation offers a new approach to obtain and interpret dual variables to binary constraints using the benefit or loss from deviation rather than marginal relaxations. The method endogenizes the trade-off between overall (societal) efficiency and compensation payments necessary to align incentives of individual players. We provide existence results and conditions under which this problem can be solved as a mixed-binary linear program. We apply the solution approach to a stylized nodal power-market equilibrium problem with binary on-off decisions. This illustrative example shows that our approach yields an exact solution to the binary Nash game with compensation. We compare different implementations of actual market rules within our model, in particular constraints ensuring non-negative profits (no-loss rule) and restrictions on the compensation payments to non-dispatched generators. We discuss the resulting equilibria in terms of overall welfare, efficiency, and allocational equity

Solving Large Extensive-Form Games with Strategy Constraints

Extensive-form games are a common model for multiagent interactions with imperfect information. In two-player zero-sum games, the typical solution concept is a Nash equilibrium over the unconstrained strategy set for each player. In many situations, however, we would like to constrain the set of possible strategies. For example, constraints are a natural way to model limited resources, risk mitigation, safety, consistency with past observations of behavior, or other secondary objectives for an agent. In small games, optimal strategies under linear constraints can be found by solving a linear program; however, state-of-the-art algorithms for solving large games cannot handle general constraints. In this work we introduce a generalized form of Counterfactual Regret Minimization that provably finds optimal strategies under any feasible set of convex constraints. We demonstrate the effectiveness of our algorithm for finding strategies that mitigate risk in security games, and for opponent modeling in poker games when given only partial observations of private information.Comment: Appeared in AAAI 201

Quality-Of-Service Provisioning in Decentralized Networks: A Satisfaction Equilibrium Approach

This paper introduces a particular game formulation and its corresponding notion of equilibrium, namely the satisfaction form (SF) and the satisfaction equilibrium (SE). A game in SF models the case where players are uniquely interested in the satisfaction of some individual performance constraints, instead of individual performance optimization. Under this formulation, the notion of equilibrium corresponds to the situation where all players can simultaneously satisfy their individual constraints. The notion of SE, models the problem of QoS provisioning in decentralized self-configuring networks. Here, radio devices are satisfied if they are able to provide the requested QoS. Within this framework, the concept of SE is formalized for both pure and mixed strategies considering finite sets of players and actions. In both cases, sufficient conditions for the existence and uniqueness of the SE are presented. When multiple SE exist, we introduce the idea of effort or cost of satisfaction and we propose a refinement of the SE, namely the efficient SE (ESE). At the ESE, all players adopt the action which requires the lowest effort for satisfaction. A learning method that allows radio devices to achieve a SE in pure strategies in finite time and requiring only one-bit feedback is also presented. Finally, a power control game in the interference channel is used to highlight the advantages of modeling QoS problems following the notion of SE rather than other equilibrium concepts, e.g., generalized Nash equilibrium.Comment: Article accepted for publication in IEEE Journal on Selected Topics in Signal Processing, special issue in Game Theory in Signal Processing. 16 pages, 6 figure

Satisfaction Equilibrium: A General Framework for QoS Provisioning in Self-Configuring Networks

This paper is concerned with the concept of equilibrium and quality of service (QoS) provisioning in self-configuring wireless networks with non-cooperative radio devices (RD). In contrast with the Nash equilibrium (NE), where RDs are interested in selfishly maximizing its QoS, we present a concept of equilibrium, named satisfaction equilibrium (SE), where RDs are interested only in guaranteing a minimum QoS. We provide the conditions for the existence and the uniqueness of the SE. Later, in order to provide an equilibrium selection framework for the SE, we introduce the concept of effort or cost of satisfaction, for instance, in terms of transmit power levels, constellation sizes, etc. Using the idea of effort, the set of efficient SE (ESE) is defined. At the ESE, transmitters satisfy their minimum QoS incurring in the lowest effort. We prove that contrary to the (generalized) NE, at least one ESE always exists whenever the network is able to simultaneously support the individual QoS requests. Finally, we provide a fully decentralized algorithm to allow self-configuring networks to converge to one of the SE relying only on local information.Comment: Accepted for publication in Globecom 201