Pricing under information asymmetry for a large population of users

Hongxia Shen, Tamer Başar

Research output: Contribution to journalArticlepeer-review

Abstract

In this paper, we study optimal nonlinear pricing policy design for a monopolistic network service provider in the face of a large population of users of different types described by a given probability distribution. In an earlier work (Shen and Başar in IEEE J. Sel. Areas Commun. 25(6):1216-1223, 2007), we had considered games with symmetric information, in the sense that either users' true types are public information available to all parties, or each user's true type is private information known only to that user. In this paper, we study the intermediate case with information asymmetry; that is, users' true types are shared information among the users themselves, but are not disclosed to the service provider. The problem can be formulated as an incentive-design problem, for which an ε-team optimal incentive (pricing) policy has been obtained, which almost achieves Pareto optimality for the service provider. A comparative study between games with information symmetry and asymmetry are conducted as well to evaluate the service provider's game preferences.

Original languageEnglish (US)
Pages (from-to)123-136
Number of pages14
JournalTelecommunication Systems
Volume47
Issue number1-2
DOIs
StatePublished - Jun 2011

Keywords

  • Active pricing
  • Incentives
  • Incomplete information
  • Information asymmetry
  • Nonlinear pricing

ASJC Scopus subject areas

  • Electrical and Electronic Engineering

Fingerprint Dive into the research topics of 'Pricing under information asymmetry for a large population of users'. Together they form a unique fingerprint.

Cite this