A Shapley Value approach to Internet Economics

Vishal Misra

Columbia University


Internet service providers (ISPs) depend on one another to provide global network services. However, the profit-seeking nature of the ISPs leads to selfish behaviors that result in inefficiencies and disputes in the network. From a microscopic view, this concern manifests in ISP selfish routing strategies and discriminatory interconnections, which limit the stability of routes, balkanize the Internet and deteriorate performance and profit of the network. From a macroscopic view, this concern is at the heart of the Network Neutrality debate, which asks for an appropriate compensation structure that satisfies all types of ISPs. In this work, we design a profit-sharing mechanism based on the Shapley value originated from Coalition Game Theory. Under this mechanism, selfish ISPs would yield globally optimal routing and interconnecting decisions, reaching a Nash equilibrium that maximizes network efficiencies. We derive closed-form profit solutions for structured ISP topologies and develop a dynamic programming procedure to calculate solutions for general topologies. Based on these solutions, we draw some implications on the bilateral settlements between ISPs. In practice, these results provide guidelines for ISPs to solve disputes and negotiate stable and incentive settlements and for governments to establish regulatory policies for the Internet industry. Bio: Vishal Misra is an Associate Professor in the Computer Science Department at Columbia University. He has received an NSF CAREER Award%

[Vishal Misra]
[Columbia University]