Introduction to the Inefficiency of Equilibria
Stub. Opens Part III: the price-of-anarchy framework for quantifying how much selfish behavior degrades social welfare, with the canonical network examples (Pigou, Braess) and inefficiency as a mechanism-design metric. (AGT ch. 17)
The foundational chapter for Part III: defines the price of anarchy (the ratio between the worst equilibrium’s welfare and the optimal welfare) and walks through the canonical network examples — Pigou’s example, Braess’s paradox — that motivate treating this ratio as a first-class design metric, not just an analysis artifact.
Outline (TODO — flesh out each)
- Fundamental network examples: Pigou’s example, Braess’s paradox
- Inefficiency of equilibria as a design metric (price of anarchy / price of stability)