Repeated Games with Intervention: Theory and Applications in Communications

Abstract

In communication systems where users share common resources, selfish behavior usually results in suboptimal resource utilization. There have been extensive works that model communication systems with selfish users as one-shot games and propose incentive schemes to achieve Pareto-optimal outcomes. However, in many communication systems, due to strong negative externalities among users, the sets of feasible payoffs in one-shot games are nonconvex. Thus, it is possible to expand the set of feasible payoffs by having users choose different action profiles in an alternating manner. In this paper, we formulate a model of repeated games with intervention. First, by using repeated games we can convexify the set of feasible payoffs in one-shot games. Second, by using intervention in repeated games we can achieve a larger set of equilibrium payoffs and loosen requirements for users' patience to achieve a target payoff. We study the problem of maximizing a welfare function defined on users' payoffs. We characterize the limit set of equilibrium payoffs. Given the optimal equilibrium payoff, we derive the sufficient condition on the discount factor and the intervention capability to achieve it, and design corresponding equilibrium strategies. We illustrate our analytical results with power control and flow control.