Welfare and Cost Aggregation for Multi-Agent Control: When to Choose Which Social Cost Function, and Why?

Many multi-agent socio-technical systems rely on aggregating heterogeneous agents' costs into a social cost function (SCF) to coordinate resource allocation in domains such as energy grids, water allocation, or traffic management. The choice of SCF often entails implicit assumptions and may lead to undesirable outcomes if not rigorously justified. In this paper, we demonstrate that what determines which SCF ought to be used is the degree to which individual costs can be compared across agents and which axioms the aggregation shall fulfill. Drawing on the results from social choice theory, we provide guidance on how this process can be used in control applications. We demonstrate which assumptions about interpersonal utility comparability- ranging from ordinal level comparability to full cardinal comparability- together with a choice of desirable axioms, inform the selection of a correct SCF, be it the classical utilitarian sum, the Nash SCF, or maximin. Thus, fixing comparability level first, then choosing an objective from the compatible class, and reporting both as part of the specification, makes the fairness and efficiency consequences transparent. We demonstrate how the proposed framework can be applied for principled allocations of water, transportation, and energy resources.