Economic efficiency requires interaction

Shahar Dobzinski, Noam Nisan and Sigal Oren

Games and Economic Behavior, 2019, vol. 118, issue C, 589-608

Abstract: We study the necessity of interaction between individuals for obtaining approximately efficient economic allocations. We view this as a formalization of Hayek's classic point of view that focuses on the information transfer advantages that markets have relative to centralized planning. We study two settings: combinatorial auctions with unit demand bidders (bipartite matching) and combinatorial auctions with subadditive bidders. In both settings we prove that non-interactive protocols require exponentially larger communication costs than do interactive ones, even ones that only use a modest amount of interaction.

Keywords: Combinatorial auctions; Communication complexity (search for similar items in EconPapers)
JEL-codes: D44 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:118:y:2019:i:c:p:589-608

DOI: 10.1016/j.geb.2018.02.010

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