Incentives in cooperative networks: a contract-theoretic perspective

Abstract

Multiuser cooperative communication significantly improves the performance of wireless communication networks. One key challenge of multiuser cooperative communication is how to design a cooperative mechanism to incentivize potential relay nodes to help a source node in its data transmission. In this paper, to address this problem, a contract-based principal-agent framework is proposed in the context of a cognitive-radio-based wireless relaying networks in which the sources’ wireless characteristics constitute hidden information which is not known by the relay. The problem is modeled as a monopolist’s problem, in which a mobile relay node acts as the principal who designs incentive-compatible (IC) and individually rational (IR) contract items, consisting of a set of rate-price pairs. Subsequently, contract items can be broadcast by the relay to nearby mobile users that want to send data. Once these sources optimally select an item and notify the relay that they are willing to accept it, the relay then chooses one source based on the highest revenue for which to provide service. The cooperative gain, relay’s revenue, and expected data rate are characterized for the optimal contract under complete information and incomplete information. Theoretical analysis and numerical results show that this pricing mechanism can lead to a win-win situation in which source nodes get good communication service and relay nodes maximize their own profit that can, in turn, be used to purchase the relay service of other nodes when needed in the future. Moreover, the proposed mechanism is shown to also exhibit other important features such as low complexity and low signaling overhead.