Truth-Telling reservations

  • Authors:
  • Fang Wu;Li Zhang;Bernardo A. Huberman

  • Affiliations:
  • HP Labs, Palo Alto, CA;HP Labs, Palo Alto, CA;HP Labs, Palo Alto, CA

  • Venue:
  • WINE'05 Proceedings of the First international conference on Internet and Network Economics
  • Year:
  • 2005

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We present a mechanism for reservations of bursty resources that is both truthful and robust. It consists of option contracts whose pricing structure induces users to reveal the true likelihoods that they will purchase a given resource. Users are also allowed to adjust their options as their likelihood changes. This scheme helps users save cost and the providers to plan ahead so as to reduce the risk of under-utilization and overbooking. The mechanism extracts revenue similar to that of a monopoly provider practicing temporal pricing discrimination with a user population whose preference distribution is known in advance.