# Economic Efficiency Requires Interaction

arXiv: https://arxiv.org/abs/1311.4721 · HTML: https://mlsanity.com/paper/1311.4721/

## Key facts

- Cited by 2 papers in the map (data through 14 Oct 2026).
- First posted on arXiv 19 Nov 2013.

## Built on by (most cited first, 2 of 2)

- [One Pass Streaming Algorithm for Super Long Token Attention Approximation in Sublinear Space](https://mlsanity.com/paper/2311.14652/) (2023)
- [Modelling Opaque Bilateral Market Dynamics in Financial Trading: Insights from a Multi-Agent Simulation Study](https://mlsanity.com/paper/2405.02849/) (2024)

## Abstract (arXiv)

We study the necessity of interaction between individuals for obtaining approximately efficient allocations. The role of interaction in markets has received significant attention in economic thinking, e.g. in Hayek's 1945 classic paper. We consider this problem in the framework of simultaneous communication complexity. We analyze the amount of simultaneous communication required for achieving an approximately efficient allocation. In particular, we consider two settings: combinatorial auctions with unit demand bidders (bipartite matching) and combinatorial auctions with subadditive bidders. For both settings we first show that non-interactive systems have enormous communication costs relative to interactive ones. On the other hand, we show that limited interaction enables us to find approximately efficient allocations.