Game Theoretic Modeling of WiFi Pricing

In this work we study the relationship between a WLAN owner acting as a wireless access provider and a paying client. We model the interaction as a dynamic game in which the players have asymmetric information – the client knows more about her utility function than the access provider knows. We find that if a client has what we call a web browser utility function, it is a Nash equilibrium for the provider to charge the client a constant price per unit time, and that clients with sufficiently high valuations for the service pay the price. In contrast, we find that if a client has what we call a file transferor utility function, with a bounded file length, the client should be unwilling to pay until the final time slot of her file transfer. We also analyze a Bayesian model in which the provider does not know whether he faces a web browser or file transferor type client, and study the case where there is no bound on the client’s file length.