Reputation-based pricing of P2P services

  • Authors:
  • Radu Jurca;Boi Faltings

  • Affiliations:
  • Ecole Polytechnique Fédérale de Lausanne (EPFL), Lausanne, Switzerland;Ecole Polytechnique Fédérale de Lausanne (EPFL), Lausanne, Switzerland

  • Venue:
  • Proceedings of the 2005 ACM SIGCOMM workshop on Economics of peer-to-peer systems
  • Year:
  • 2005

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Abstract

In the future peer-to-peer service oriented computing systems, maintaining a cooperative equilibrium is a non-trivial task. In the absence of Trusted Third Parties (TTP's) or verification authorities, rational service providers minimize their costs by providing ever degrading service quality levels. Anticipating this, rational clients are willing to pay only the minimum amounts (often zero) which leads to the collapse of the market.In this paper, we show how a simple reputation mechanism can be used to overcome this moral hazard problem. The mechanism does not act by social exclusion (i.e. exclude providers that cheat) but rather by allowing flexible service level agreements in which quality can be traded for the price. We show that such a mechanism can drive service providers of different types to exert the social efficient effort levels.