Mechanism Design for Incentive Compatible Control of Networks

Network mechanism design aims to achieve system-level goals such as maximization of aggregate network performance using specific methods in networks , where users are strategic and selfish decision-makers with individual preferences. By imposing certain rules and pricing schemes on users, the mechanism designer aligns the system-wide objectives with those of the users, and achieves the targeted goals while ensuring user incentive compatibility. This chapter provides an overview of recent results in the area of mechanisms and games for distributed control of networks. The methodology and algorithms developed are applied to diverse network control problems such as interference and spectrum management. We model the heterogeneous behavior of users, which ranges from altruistic to selfish and to malicious, within the analytical framework of game theory. A mechanism design approach is adopted to quantify the effect of adversarial behavior, which ranges from extreme selfishness to destructive maliciousness. Differentiated pricing is proposed as a method to counter and mitigate adversarial behavior. An additional application to location privacy in mobile commerce is also briefly discussed.