Hidden-Action in Network Routing
Feldman, M.
Chuang, J.
Stoica, I.
Shenker, S.
Hebrew Univ., Jerusalem;
This paper appears in: Selected Areas in Communications, IEEE Journal on
Publication Date: August 2007
Volume: 25,
Issue: 6
On page(s): 1161-1172
ISSN: 0733-8716
INSPEC Accession Number: 9614138
Digital Object Identifier: 10.1109/JSAC.2007.070810
Current Version Published: 2007-07-23
Abstract
In communication networks, such as the Internet or mobile ad-hoc networks, the actions taken by intermediate nodes or links are typically hidden from the communicating endpoints; all the endpoints can observe is whether or not the end-to-end transmission was successful. Therefore, in the absence of incentives to the contrary, rational (i.e., selfish) intermediaries may choose to forward messages at a low priority or simply not forward messages at all. Using a principal-agent model, we show how the hidden-action problem can be overcome through appropriate design of contracts in both the direct (the endpoints contract with each individual router directly) and the recursive (each router contracts with the next downstream router) cases. We further show that, depending on the network topology, per-hop or per-path monitoring may not necessarily improve the utility of the principal or the social welfare of the system.
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