In this thesis, we present a new methodology for resource sharing algorithms in distributed systems. We propose that a distributed computing system should be composed of a decentralized community of microeconomic agents. We show that this approach decreases complexity and can substantially improve performance. We compare the performance, generality and complexity of our algorithms with non-economic algorithms. To validate the usefulness of our approach, we present economies that solve three distinct resource management problems encountered in large, distributed systems. The first economy performs CPU load balancing and demonstrates how our approach limits complexity and effectively allocates resources when compared to non-economic algorithms. We show that the economy achieves better performance than a representative non-economic algorithm. The load balancing economy spa...

We introduce the framework of parameterized collections of games with and without sidepayments and provide three nonemptiness of approximate core theorems for games in parameterized collections. The parameters bound (a) the...

No. 184. This revision has been freqently cited, cf. Bennett and Wooders

Abstract- According to Network Effect literature network externalities lead to market failure due to Pareto-inferior coordination results. We show that the assumptions and simplifications implicitly used for modeling standardization processes fail to explain the real-world variety of diffusion courses in today’s dynamic IT markets and derive requirements for a more general model of network effects. We argue that Agent-based Computational Economics provides a solid basis for meeting these requirements by integrating evolutionary models from Game Theory and Institutional Economics. I.

This paper presents a micro-model of knowledge creation through the interactions among a group of people. Our model incorporates two key aspects of the cooperative process of knowledge creation: (i) heterogeneity of people in their state of knowledge is essential for successful cooperation in the joint creation of new ideas, while (ii) the very process of cooperative knowledge creation affects the heterogeneity of people through the accumulation of knowledge in common. The model features myopic agents in a pure externality model of interaction. Surprisingly, in the general case for a large set of initial conditions we find that the equilibrium process of knowledge creation converges to the most productive state, where the population splits into smaller groups of optimal size; close interaction takes place within each group only. This optimal size is larger as the heterogeneity of knowledge is more important in the knowledge production process. Equilibrium paths are found analytically, and they are a discontinuous function of initial heterogeneity. JEL

We introduce the concept of a parameterized collection of games with limited side payments, ruling out large transfers of utility. Under the assumption that the payoff set of the grand coalition is convex, we show that a game with limited side payments has a nonempty "-core. Our main result is that, when some degree of side-paymentness within nearly-effective small groups is assumed, then all payoffs in the "-core treat similar players similarly. A bound on the distance between "-core payoffs of any two similar players is given in...

This paper provides a complete solution to the question of the existence of equilibria in games with general strategy spaces that may be discrete, continuum or non-convex and payoff functions that may be discontinuous or do not have any form of quasi-concavity. We establish a single condition, called recursive diagonal transfer continuity, which is both necessary and sufficient for the existence of pure strategy Nash equilibrium in games with arbitrary compact strategy spaces and payoffs. As such, our result strictly generalizes all the existing results on the existence of pure strategy Nash equilibrium. Moreover, recursive diagonal transfer continuity also permits full characterization of symmetric, mixed strategy, and Bayesian Nash equilibria in games with general strategy spaces and payoffs. The approach and main result developed in the paper can also allow us to ascertain the existence of equilibria in important classes of economic games. As an illustration, we show how they can be employed to fully characterize the existence of competitive equilibrium for economies with excess demand functions. The method of proof adopted to obtain our main result is also new and elementary — a non-fixed-point-theorem approach.

A neural fuzzy system can learn an agent profile of a user when it samples user question-answer data. A fuzzy system uses if-then rules to store and compress the agent's knowledge of the user's likes and dislikes. A neural system uses training data to form and tune the rules. The profile is a preference map or a bumpy utility surface defined over the space of search objects. Rules define fuzzy patches that cover the surface bumps as learning unfolds and as the fuzzy agent system gives a finer approximation of the profile. The agent system searches for preferred objects with the learned profile and with a new fuzzy measure of similarity. The appendix derives the supervised learning law that tunes this matching measure with fresh sample data. We test the fuzzy agent profile system on object spaces of flowers and sunsets and test the fuzzy agent matching system on an object space of sunset images. Rule explosion and data acquisition impose fundamental limits on the system designs.

The assumption of quasi-concave utility functions is crucial for the existence of a general equilibrium in a competitive economy. To drop this assumption implies to lose a main condition for the usual fixed point theorems used in the proof of existence of general equilibrium. But it will be shown that changing this assumption by another one, the weak monotonicity of the derived demand correspondences, a fixed point theorem on lattices can be applied to show the existence of equilibrium. 1 Introduction The assumption of quasi-concave utility functions plays a fundamental role in the proof of existence of a general equilibrium in a competitive economy. It ensures the convexity of demand correspondences, which is a condition for the applicability of the usual fixed point arguments. To drop this assumption implies, therefore, to lack the help from a very useful mathematical tool [Debreu 59]. The problem that arises considering non-convex preferences can be solved by means of a corollary t...

We suggest a simple asset market model in which we analyze competitive and strategic behavior simultaneously. If for competitive behavior two-fund separation holds across periods then it also holds for strategic behavior. In this case the relative prices of the assets do not depend on whether agents behave strategically or competitively. Those agents acting strategically will however invest less in the common mutual fund. Constant relative risk aversion and absence of aggregate risk are shown to be two alternative sufficient conditions for two-period fund separation. With derivatives further strategic aspects arise and strategic behavior is distinct from competitive behavior even for those utility functions leading to two-fund separation. Keywords: strategic behavior, competitive behavior, two-fund-separation, CAPM. JEL classification: C72, G11, D83. We like to thank Piero Gottardi, Enrico De Giorgi, and Rüdiger Frey for valuable discussions. Financial support by the national centre of competence in research “Financial Valuation and Risk Management” is gratefully acknowledged. The national centers in research are managed by the Swiss National Science Foundation on behalf of the federal authorities. 2 1