On characterizing economic-based incentive-compatible mechanisms to solving hidden information and hidden action in ad hoc network

Abstract

This paper attempts to comprehensively characterize economic-based incentive compatible routing and forwarding mechanisms in ad hoc network, including hidden information in routing phase, and hidden action in forwarding phase. By incentive compatibility it means that system designer should respect rationality of nodes, and design proper incentive mechanisms to encourage nodes to conduct something beneficial to the whole system, while nodes pursued their own utility. Firstly, based on analysis of extensive game form, we argue that, for each participant, truth-telling is the expected dominant strategy equilibrium in VCG-like routing mechanism, even under the situation of mutually dependent link cost. Then, Individual rationality (IR) and Incentive Compatibility (IC) constraints are formally offered, which should be satisfied by any game theoretical routing and forwarding scheme. And different solution concepts are investigated to characterize the economic meanings of two kind forwarding approaches, that is, Nash equilibrium with no per-hop monitoring and dominant strategy equilibrium with per-hop monitoring. Finally, we discuss frugality problem in VCG-like mechanism. © Springer-Verlag Berlin Heidelberg 2007.