Anonymizing Web services through a club mechanism with economic incentives

Preserving privacy during Web transactions is a major concern for individuals and organizations. One of the solutions proposed in the literature is to maintain anonymity through group cooperation during Web transactions. The lack of understanding of incentives for encouraging group cooperation is a major drawback in such systems. We propose an anonymizing club mechanism, and sequential economic strategy for trusted collaboration. We model the individual transactions as a Prisoners' Dilemma, where two players either cooperate or defect while maintaining each other's anonymity. The activities of the participants over a series of transactions can be modeled as a sequential repeated game. We determine conditions to ensure cooperation among the participants in the sequential repeated game, even if defecting is a dominant strategy in each individual Prisoners' Dilemma game. Our results show that by adopting an appropriate initiation fee and adequate fine for malicious behavior, both enforced through a trusted central authority, we can sustain cooperation in the proposed anonymizing club mechanism.