Incentive-Based Pricing for Network Games with Complete and Incomplete Information

In this paper, we introduce the concept of dynamic pricing within the context of our previous Stackelberg network game model and view the ISP’s policy as an incentive policy, and the underlying game as a reverse Stackelberg game. We study this incentive-design problem under complete information as well as incomplete information. In both cases, we show that the game is not generally incentive controllable (that is, there may not exist pricing policies that would lead to attainment of a Pareto-optimal solution), but it is -incentive controllable (that is, the ISP can come arbitrarily close to a Pareto-optimal solution). The paper also includes a comparative study of the solutions under static and usage-based pricing policies, illustrated by numerical computations. Index Terms Dynamic pricing, Incentive policy, Reverse Stackelberg game, Incentive controllability, Pareto-optimal solution, Team solution, Incentive-design problem, Complete information, Incomplete information.