__Israel CS THEORY DAY__

Open University of

Division of Computer Science

__Date__**: 17.3.08**

__Speaker__**: Eva Tardos **

__Title__**: Bargaining and Trading in Networks.**

__Abstract__**:**

**Network games play a fundamental role in
understanding behavior in many domains, ranging from communication networks
through markets, to social networks. In this talk, we will consider bargaining
and trading in a network setting, where a set of agents have the opportunity to
choose whom they want to bargain or trade with, along the edges of a graph
representing social-network relations or trade routes. In the bargaining
context, we analyze a model arising in network exchange theory, which can be
viewed as a direct extension of the well-known Nash bargaining solution for two
player games. This model is known to be surprisingly effective at picking up
even subtle differences in bargaining power that have been observed
experimentally on small examples, but it has remained an open question to
characterize the values taken by this solution on general graphs, or to find an
efficient means to compute it. In the trading context, we consider a model with
traders, where traders set prices strategically, and then buyers and sellers
react to the prices they are offered. We characterize the outcomes in both
models, thus providing graph-theoretic basis for quantifying the players’
relative amounts of power in the network. We also show that the outcomes are
socially optimal and can be computed in polynomial time. Joint
work with Jon Kleinberg, Larry Blume, and David
Easley.
**