The Impact of Cooperation in Bilateral Network Creation

Many real-world networks, like the Internet, are not the result of central design but instead the outcome of the interaction of local agents who are selfishly optimizing for their individual utility. The famous Network Creation Game [Fabrikant et al., PODC 2003] enables us to understand such processes, their dynamics, and their outcomes in the form of equilibrium states. In this model, agents buy incident edges towards other agents for a price of~\(\alpha\) and simultaneously try to minimize their buying cost and their total hop distance. Since in many real-world networks, e.g., social networks, consent from both sides is required to maintain a connection, Corbo and Parkes [PODC 2005] proposed a bilateral version of the Network Creation Game, in which mutual consent and payment are required in order to create edges. It is known that the bilateral version has a significantly higher Price of Anarchy, compared to the unilateral version. This is counter-intuitive, since cooperation should help to avoid socially bad states. We investigate this phenomenon by analyzing the Price of Anarchy of the bilateral version with respect to different solution concepts that allow for various degrees of cooperation among the agents. With this, we provide insights into what kind of cooperation is needed to ensure that socially good networks are created. We present a collection of asymptotically tight bounds on the Price of Anarchy that precisely map the impact of cooperation on the quality of tree networks and we find that weak forms of cooperation already yield a significantly improved Price of Anarchy. Moreover, for general networks we show that enhanced cooperation yields close to optimal networks for a wide range of edge prices.