What Do Computing and Economics Have to Say to Each Other?

I described a 1999 result by Koutsoupias and Papadimitriou, regarding multi-agent systems. They studied systems in which non-cooperative agents share a common resource and proposed the ratio between the worst possible Nash equilibrium and the social optimum as a measure of the effectiveness of the system. This ratio has become known as the "Price of Anarchy," as it measures how far from optimal such non-cooperative systems can be. They showed that the price of anarchy could be arbitrarily high, depending on the complexity of the system. The Price-of-Anarchy concept has later been extended to other types of equilibria--for example, Pareto-Optimal Equilibria.b