Allais' Paradox and Resource Allocation in Telecommunication Networks

Publication Type:

Journal Article

Source:

Telecommunication Systems, p.1-12 (2018)

Abstract:

The question of resource allocation arises whenever demand exceeds supply. The common approach is to optimize the network efficiency while maintaining some fairness among the users. While resource allocation policies use various definitions for network effi ciency and fairness, most of them are based on maximization of a utility function. The mathematical formalism underlying these approaches is the same as the mathematical formalism used in the Bernoulli model in finance, where a player is supposed to maximize his expected utility function. This model is disproved by Allais' paradox, which provides examples of rational behaviors which cannot be described by the maximization of any utility function. By transposing this paradox to telecommunication networks for the purpose of resource allocation, we build examples of rational operators whose optimal choice cannot be described by the maximization of any utility function. By optimizing a trade-off between network efficiency and fairness, we propose a model similar to the risk-return trade-off optimization in finance.