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This paper is concerned with network-based multi-user haptic interaction using a distributed peer-peer control architecture. It proposes new quantitative measures for quantifying the fidelity of haptic simulations in such environments. User's perceived admittance and discrepancy among local copies of virtual objects are considered in defining these measures. A state prediction scheme is proposed to compensate for the negative effects of the network communication delay on the transparency and stability of the haptic simulation. An optimization problem is formulated for selecting the control gains that can enhance the performance while maintaining system stability. Numerical analysis and haptic interaction experiments are carried out to demonstrate the effectiveness of the proposed approach.