Financial Cryptography: Discriminatory Pricing Mechanism

This work presents an adaptive profitable discriminatory pricing mechanism for cloud computing based on secure function decomposition, cryptographic commitments and zero knowledge proof. Cloud computing is an emerging trend of enterprise resource planning where a selling agent or service provider (S) wants to allocate a set of computational resources and related IT services optimally and fairly among many buying agents or service consumers (B) within its capacity constraint. Each service consumer discloses its demand plan for an IT portfolio within its budget constraint and rank of preference. An IT portfolio may include SaaS, PaaS, IaaS, CaaS, DaaS and dSaaS. The basic objective of the service provider is to optimize its expected revenue within target profit margin. It is basically a problem of secure function evaluation where the concept of decomposition of a function is considered. It is a constrained nonlinear optimization problem; the search is governed by a set of intelligent moves. The communication complexity of the pricing mechanism depends on the time constraint of the negotiating agents, their information state and the number of negotiation issues; it also depends on number of negotiation rounds and the complexity of IT portfolio. The computational cost depends on the complexity of function decomposition. The security and privacy of strategic data of the trading agents provides business intelligence to the pricing mechanism. The ultimate objective of the mechanism is to predict a profitable discriminatory pricing plan for each consumer. [