Many digitally-mediated activities present participants with complex strategic decisions. Strategic interaction in electronic commerce arises, for instance, in negotiation, trading, resource finding, matchmaking, advertising, recommendation, contracting, and executing. Scenarios in these applications are properly modeled as games, however, direct application of game theory quickly becomes infeasible as problem complexity grows. Despite enormous advances in game theory and mechanism design, an ever-growing number of applications are intractable using standard methods. Thus, designers must resort to highly stylized models, or non-strategic analysis using simulation or experimentation methods.
This project bridges the gap between simulation and game-theoretic analysis by developing computational tools for empirical game-theoretic analysis. The new techniques combine gaming, high-fidelity simulation, experimental manipulation, statistical analysis, search, and game-theoretic reasoning in a principled way, to reveal the shape of complex strategic environments. The results of the project will have immediate practical application to strategic reasoning in many domains, including government auctions for spectrum, oil and gas, etc.; complex matching programs (e.g., medical residency); deregulated energy market operation; and business-to-business electronic commerce. By extending the scope of problems amenable to strategic analysis, this research will inform the design of more efficient resource allocation mechanisms for public as well as private-sector applications.
