Game-theoretic Perspective Research Articles

Truthful, Practical and Privacy-Aware Demand Response in the Smart Grid via a Distributed and Optimal Mechanism

High penetration of Renewable Energy Sources in modern smart grids necessitates the development of Demand Response (DR) mechanisms as well as corresponding innovative services for the emerging flexibility markets. From a game-theoretic perspective, the key requirements for a DR mechanism are: efficiency in terms of social welfare, practical applicability, scalability, privacy and incentive compatibility, in the sense of making it a dominant strategy for each user to act truthfully according to his/her real preferences, leaving no room for cheating. Previous works typically address only a subgroup of these requirements. In this paper, we propose a DR architecture, including a mechanism based on Ausubel’s clinching auction and a communication protocol, that provably guarantee both efficiency and truthful user participation. Practicality/easiness of participation is enhanced via simple queries, while scalability and user privacy are preserved via a distributed implementation. Simulation results confirm the desired properties, while also showing that the truthfulness property becomes even more important in markets where participants are not particularly flexible.

Revenue sharing in edge-cloud systems: A Game-theoretic perspective

We explore the design of revenue sharing mechanisms for an Edge-Cloud computing system from a game-theoretic perspective. Different from traditional cloud computing, the providers in an Edge-Cloud system are independent and self-interested. The system adopts a task distribution mechanism to maximize the total revenue received from clients and employs a revenue sharing mechanism to split the received revenue among service providers. Under system-level mechanisms, service providers game with the system in order to maximize their own utilities by strategically allocating their resources. We introduce a game-theoretic framework to model the competition among the service providers as a non-cooperative game. We show the existence of Nash equilibrium in the game theoretically and experimentally. We find that at Nash equilibria, the revenue sharing design based directly on actual contributions of service providers results in significantly worse system-level performance than revenue sharing mechanisms based on marginal contributions. We find that the reason for this seemingly counter-intuitive result is that revenue sharing mechanisms based on marginal contributions discourage providers with less powerful resources from contributing resources to the system at equilibrium state. Our framework offers an economics approach to the understanding of Edge-Cloud systems and provides fundamental insights into their revenue sharing design.

Regulation strategies of ride-hailing market in China: an evolutionary game theoretic perspective

With the popularity of the sharing economy, ride-hailing services have greatly affected people’s travel and become a new travel mode for urban residents. However, the lack of effective industry regulation has resulted in serious operational problems and growing difficulties in the furthering development of ride-hailing services in China. Therefore, it is necessary to study the regulation strategies of multiple subjects involved in ride-hailing industry. Based on evolutionary game theory, the paper establishes the tripartite evolution game model about regulation strategies of ride-hailing industry. The theoretical research and simulation results show that the evolutionarily stable strategy of a single subject (Transportation Network Company, driver or passenger) is affected by the strategies of other two subjects together. Moreover, when making the decision, the Transportation Network Companies (TNCs) need to consider the difference between benefits and costs, user scale, incentives and penalties from the government. Drivers need to consider their benefits and costs, travel user scale and penalties from the government and the TNCs. Besides, the benefits and costs, and the harmony of ride-hailing industry need to be considered for passengers. Potential policy implications are proposed.

Can \u2018Civil Enterprises\u2019 survive in the market? Some game theoretical considerations on the one-shot game

Civil enterprises (CEs) are firms whose main goal is to produce benefits for the community, working according to a logic of reciprocity. In this paper we discuss, from a game theoretical perspective, as to what extent it is possible for such enterprises to survive in competition with profit-maximizing firms in the marketplace, since market competition might take the form of a prisoner’s dilemma game, where the public good at stake is the commitment to moral rules. In those games cooperative strategies are strictly dominated by the defective behavior of the players, i.e. CEs would not survive while retaining their values. We argue that market competition is more appropriately modelled as an n-firm model and show that, given a sufficient number of CEs in the market, they can survive despite having to interact with for-profit firms, even when the game is played only once.

A game-theoretic method for resilient control design in industrial multi-agent CPSs with Markovian and coupled dynamics

Multi-agent cyber-physical systems (CPSs) are ubiquitous in various modern critical infrastructures, especially in industrial automation control involved in the petrochemical, metallurgy, textile, and pharmaceutical, which are vulnerable for their hierarchically and horizontally interconnected architecture. In this paper, we investigate a resilient control design problem for industrial multi-agent CPSs of centralised information structure, with Markovian and physically coupled dynamics from a game-theoretic perspective. First, we investigate a worst-case design problem and solve for worst-case disturbance strategy and optimal disturbance attenuation level parameter through an equivalent two-person zero-sum differential game in both finite- and infinite-horizon. Second, we study a corresponding N-person worst-case nonzero-sum differential game and derive state-feedback Nash equilibrium solution of robustness property as resilient control strategy for each agent. The experimental case study is given to demonstrate that using resilient control strategy, each agent could maintain its physical plant operationally normal under cyber attack, malicious disturbance input and physical state interdependency.

RETRACTED ARTICLE: Blockchain-based intelligent contract for factoring business in supply chains

Factoring business, an important aspect in the supply chain finance field, has significant potential in adopting blockchain-based intelligent contract technology. Based on the existing theories of factoring business in supply chains, this paper conducts a coupling analysis between blockchain technology and supply chain factoring business. Specifically, we propose the application scenarios of blockchain-based intelligent contract technology in the supply chain factoring business from three aspects: the division and transfer of creditors’ rights certificate, the factoring financing of upstream suppliers, and the due payment of core enterprises, and elaborate their implementation processes. Furthermore, from a game theoretical perspective, we analyze the mechanism of the key technology implementation of the intelligent contract to verify whether the nodes on the blockchains will follow the relevant protocols to automatically execute them. Finally, we conduct a three-way game analysis of the supply chain factor financing process and obtain an equilibrium solution based on the principle of utility maximization, which highlights the optimization effect of the intelligent contract technology on the decision-making behavior of individual entities in the supply chain.

Cross-border litigation: Evaluating the Brexit impact – a socio-legal model for data analysis

The UK decision to leave the European Union could directly impact on the application of the EU private international law (‘PIL’) instruments in the UK. Any fresh legal uncertainty driven by such a change in the legal landscape in relation to PIL could have significant impact on private parties’ access to remedies. This article proposes a socio-legal model for measuring the Brexit impact on litigants’ access to legal remedies. In order to systematically identify the important issues (which need to be considered by policy-makers as priority in this context), the proposed theoretical model is developed around the litigants’ strategies. The advanced model has two major features. First, it is set to analyse the triangular relationship between: 1) jurisdiction (procedural rules); 2) choice of law (applicable substantive laws); 3) outcome of a cross-border case. Secondly, the relevant claimants’ and defendants’ strategies in cross-border cases are thoroughly considered by taking a game theoretic perspective.

Evolutionary gaming approach for decision making of Tier‐3 Internet service provider networks migration to SoDIP6 networks

SummaryWith the increasing number of Internet of Things (IoT) devices, current networking world is suffering in terms of management and operations with lack of IPv4 addresses leading to issues like network address translation (NAT) proliferation, security and quality of services. Software‐defined networking (SDN) and Internet Protocol version 6 (IPv6) are the new networking paradigms evolved to address related issues of legacy IPv4 networking. To adapt with global competitive environment and avoid all existing issues in legacy networking system, network service providers have to migrate their networks into IPv6 and SDN‐enabled networks. But immediate transformations of existing network are not viable due to several factors like higher cost of migration, lack of technical human resources, lack of standards and protocols during transitions, and many more. In this paper, we present the migration analysis for proper decision making of network transition in terms of customer demand, traffic engineering, and organizational strength with operation expenditure for network migration using evolutionary gaming approach. Joint migration to SDN‐enabled IPv6 network from game theoretic perspective is modeled and is validated using numerical results obtained from simulations. Our empirical analysis shows the evolutionary process of network migration while different internal and external factors in the organization affect the overall migration. Evolutionary game in migration planning is supportive in decision making for service providers to develop suitable strategy for their network migration. The proposed approach for migration decision making is mostly applicable to fairly sustained service providers who lack economics, regulation/policy, and resources strengths.

Demand-Side Management With Shared Energy Storage System in Smart Grid

Energy storage systems (ESSs) have been considered to be an effective solution to reduce the spatial and temporal imbalance between the stochastic energy generation and the demand. To effectively utilize an ESS, an approach of jointly sharing and operating an ESS has been proposed in a conceptual way. However, there is a lack of analytic approaches designed to optimize the operation of such a system considering interactions among users in a game theoretic perspective. In this study, we propose the energy capacity trading and operation (ECTO) game where each agent determines two actions, capacity trading, and the 24-hour ahead charging-discharging scheduling with the capacity that will be assigned, to minimize the energy operation cost. We then propose a distributed optimization strategy to find a generalized Nash equilibrium for the proposed ECTO game. Simulation studies show that when optimally operated, a shared ESS can decrease both the total energy operating cost and the peak-to-average ratio of the energy for the entire grid compared to the conventional ESS control strategy without ESS sharing.

Game Theoretical Perspectives on Pricing Decisions in Asymmetric Competing Supply Chains

This paper investigates a dual exclusive channel model in which each manufacturer distributes its goods through a single exclusive retailer, but two goods are substitute. The decision rule between two channels is Nash game in Case 1, while it is Stackelberg game in Case 2. From manufacturer Stackelberg (MS), retailer Stackelberg (RS), and Nash game (VN) theoretic perspectives, nine game models are developed to examine the effect of product substitutability and relative channel status on pricing decisions at both horizontal competition and vertical competition levels. The analysis suggests that the type of price leadership scenarios, the level of product substitutability, and the relative channel status play a significant role in decision making. For instance, in case 1, the symmetric leadership (two manufacturers or two retailers are leaders) is always the dominant strategy and equilibrium for either two manufacturers or two retailers regardless of product substitutability and relative channel status. Nevertheless, the asymmetric leadership may lead channel members to encounter a prisoner’s dilemma if the relative channel status is small. By contrast, in Case 2, the symmetric leadership is not the unique dominant strategy for either two manufacturers or two retailers. In contrast to many earlier results, we also show that whether the first-mover and the late-mover advantages exist, depending on the level of related channel status.

Blockchain Competition Between Miners: A Game Theoretic Perspective

We model the competition over mining resources and over several cryptocurrencies as a non-cooperative game. Leveraging results about congestion games, we establish conditions for the existence of pure Nash equilibria and provide efficient algorithms for finding such equilibria. We account for multiple system models, varying according to the way that mining resources are allocated and shared and according to the granularity at which mining puzzle complexity is adjusted. When constraints on resources are included, the resulting game is a constrained resource allocation game for which we characterize a normalized Nash equilibrium. Under the proposed models, we provide structural properties of the corresponding types of equilibrium, e.g., establishing conditions under which at most two mining infrastructures will be active or under which no miners will have incentives to mine a given cryptocurrency.

How Property Formalization Schemes Affect Land Tenure Security? A Game Theoretical Perspective

Game theory modeling of the evolution of property rights has paid little attention to the issues of formalization of property rights in land. In developing economies where customary legal arrangements are pervasive, formalization of these rights can play a crucial step in unlocking the growth potential of the local economy. However, there is evidence that the interaction between the newly introduced formalization mechanism and the existing customary system can instead, create further land tenure insecurity. I develop the hawk-dove model to include the choice of formalization of property rights. The model shows that a newly introduced formalization mechanism can lead to a secure system of land tenure if (1) it is effective enough for the parties that register unilaterally to fully capture the original value of the plot and (2) sufficiently harshly punishes those that take an aggressive stance towards the registering party (3) and signals that possession will be decisive if multiple parties attempt to register the same plot. Furthermore, depending on the height of the fees of adjudication when both parties attempt to register the same plot, the English Rule (i.e. shifting the court fee to the loosing party) can incentivize parties to engage in registration selectively. Finally, the attractiveness of registration will rarely diminish even if the cooperation within a customary system is highly beneficial, thus sometimes leading to suboptimal outcomes.

Tariffs under Globalization 3.0

The aim of this study is to examine the role that tariffs could possibly play beyond an infant industry argument, by considering three scenarios on how a technological competition can evolve, an approach that is built on the principle of fairness. At Davos, World Economic Forum (2019) characterized globalization as evolving from the old silk road (Globalization 1.0) to now possibly entering a phase of Globalization 4.0. The possibility of the new phase of globalization is partially triggered by a de-globalization movement grounded on populist sentiment and a promotion of “me-first” rather than a “win-win”, moving away from the neoclassical framework of international trade based on the balance of current account and capital account, the principle by which Globalization 3.0 has operated for many years. Some country leaders blatantly ignored standard textbook framework on international trade, advocating fair trade principle based on zero current account balance as the ideal. The threat of raising tariffs as a policy tool can escalate into an excuse for a revival of Keynesian economics applied globally, resulting in “lose-lose” rather than “win-win” outcome that neoclassical economics advocates. Can tariffs be rationalized beyond an attempt to pursue Keynesian economics? With a game-theoretical perspective heuristically explained in a neoclassical framework of international trade, this study further evaluates the possible consequences of tariffs under Globalization 3.0 and speculate on its effectiveness in promoting new concepts for Globalization 4.0. This study advocates that if a neoclassical approach to international trade will ever be revisited, an appropriate framework for discussing future policy must be used. It concludes that tariffs are ineffective in helping to facilitate the rules of a game that can determine the winner of a technological race under a Rawlsian veil of ignorance, which is not the whole part but nevertheless an important aspect of globalization 4.0.

WiFi Intrusion Detection and Prevention Systems Analyzing: A Game Theoretical Perspective

WiFi is the de-facto wireless standard which suffers from a significant security vulnerability. Indeed, the WiFi management frames are not sent via an encrypted channel. However, many studies have been conducted to face this issue, but, preparing a comprehensive model for assessing the performance of these systems under different conditions is a research gap. In this paper, we propose an Abstract WIDPS with a useful but straightforward response function in confronting management frames transferring in an insecure channel. Indeed, we model the interaction between the entities involved in the problem based on game theory and propose a performance evaluation method for WIDPS depending on the network application context and the importance of confidentiality, integrity, and availability as the three principles of information security. This model provides an innovative solution for WIDPS qualitative classification. Finally, we evaluate the proposed method in several different samples, which obtains efficient results for classification and tuning of WIDPSs.

Rogues and Deviants: a game-theoretic perspective on opportunism in strategic alliances

ABSTRACTThis research examines how relational factors, such as monitoring, relative alliance identity (RAI), and trust, influence opportunism and, consequently, alliance performance. The authors suggest that the strategic alliances literature would benefit from recognising that opportunism does not always originate from the firm (rogue opportunism), but can also originate from individual employees (deviant opportunism). Hypotheses are tested in a multi-method approach within a business simulation and a cross-sectional sample of alliance executives. The results demonstrate a U-shaped relationship between trust and opportunism; however, monitoring moderates the relationship such that at high levels of trust, opportunism is practically non-existent. Further, results indicate that employees’ identification with the alliance impedes opportunism. Additionally, both types of opportunistic behaviours negatively impact the performance of partner firms and alliances.

Competitive diffusion in signed social networks: A game-theoretic perspective

Signed network can be used to effectively characterize both collaborative and antagonistic interactions among individuals in networks. In this paper, we consider a setting in which two stubborn agents compete to maximize the expected number of non-stubborn agents adopting their opinions in a signed network. Here, two stubborn agents hold two competing opinions which never change. They propagate their opinions by selecting some non-stubborn agents (who can change their opinions) to connect to. The payoff of each stubborn agent is denoted by the expected number of non-stubborn agents adopting its opinion. We model the competitive problem as a zero-sum game, where players are the two stubborn agents. Firstly, several properties of this game are presented. Secondly, the signed network with structurally balanced property is investigated, and we find that the number of non-stubborn agents in a subgroup can equal the payoff of one stubborn agent. Moreover, for the signed cycle graph, a necessary and sufficient condition is given to determine whether a strategy profile is Nash equilibrium. Finally, we show that the stubborn agent can increase its payoff by selecting a suitable non-stubborn agent to connect to.

A Game-Theoretic Analysis of Reallocation Mechanisms for Airport Landing Slots

As airport arrival capacities increasingly constrain the air transportation system, there is a need for mechanisms by which airlines can exchange landing slots amongst each other. We analyze two such mechanisms, scaled airline preferences and two-for-two trades, from a game-theoretic perspective. This paper investigates the extent to which strategic behavior on part of the airlines can impact the performance of each mechanism. In addition to increasing system efficiency, the reallocation mechanisms should exhibit desirable fairness and incentive properties, notions that we formally investigate in this paper. We show that neither mechanism has good incentive properties, and we develop simple, non-truthful strategies that airlines can use. Our empirical results show that for the scaled airline preferences mechanism, the best performing strategy depends greatly on the extent to which fairness is enforced. For the two-for-two trades mechanism, a simple threshold strategy can yield significant cost savings relative to the best-response strategy, and system efficiency increases when all airlines use the threshold strategy in equilibrium.

Nontransferable utility bankruptcy games

In this paper, we analyze bankruptcy problems with nontransferable utility (NTU) from a game theoretical perspective by redefining corresponding NTU-bankruptcy games in a tailor-made way. It is shown that NTU-bankruptcy games are both coalition-merge convex and ordinally convex. Generalizing the notions of core cover and compromise stability for transferable utility (TU) games to NTU-games, we also show that each NTU-bankruptcy game is compromise stable. Thus, NTU-bankruptcy games are shown to retain the two characterizing properties of TU-bankruptcy games: convexity and compromise stability. As a first example of a game theoretical NTU-bankruptcy rule, we analyze the adjusted proportional rule and show that this rule corresponds to the compromise value of NTU-bankruptcy games.

Multi-player flow games

In the traditional maximum-flow problem, the goal is to transfer maximum flow in a network by directing, in each vertex in the network, incoming flow to outgoing edges. The problem corresponds to settings in which a central authority has control on all vertices of the network. Today's computing environment, however, involves systems with no central authority. In particular, in many applications of flow networks, the vertices correspond to decision-points controlled by different and selfish entities. For example, in communication networks, routers may belong to different companies, with different destination objectives. This suggests that the maximum-flow problem should be revisited, and examined from a game-theoretic perspective. We introduce and study \em multi-player flow games (MFGs, for short). Essentially, the vertices of an MFG are partitioned among the players, and a player that owns a vertex directs the flow that reaches it. Each player has a different target vertex, and the objective of each player is to maximize the flow that reaches her target vertex. We study the stability of MFGs and show that, unfortunately, an MFG need not have a Nash Equilibrium. Moreover, the Price of Anarchy and even the Price of Stability of MFGs are unbounded. That is, the reduction in the flow due to selfish behavior is unbounded. We study the problem of deciding whether a given MFG has a Nash Equilibrium and show that it is Σ_2^P$-complete, as well as the problem of finding optimal strategies for the players (that is, best-response moves), which we show to be NP-complete. We continue with some good news and consider a variant of MFGs in which flow may be swallowed. For example, when routers in a communication network may drop messages. We show that, surprisingly, while this model seems to incentivize selfish behavior, a Nash Equilibrium that achieves the maximum flow always exists, and can be found in polynomial time. Finally, we consider MFGs in which the strategies of the players may use non-integral flows, which we show to be stronger.

Evolutionary dynamics of organised crime and terrorist networks

Crime is pervasive into modern societies, although with different levels of diffusion across regions. Its dynamics are dependent on various socio-economic factors that make the overall picture particularly complex. While several theories have been proposed to account for the establishment of criminal behaviour, from a modelling perspective organised crime and terrorist networks received much less attention. In particular, the dynamics of recruitment into such organisations deserve specific considerations, as recruitment is the mechanism that makes crime and terror proliferate. We propose a framework able to model such processes in both organised crime and terrorist networks from an evolutionary game theoretical perspective. By means of a stylised model, we are able to study a variety of different circumstances and factors influencing the growth or decline of criminal organisations and terrorist networks, and observe the convoluted interplay between agents that decide to get associated to illicit groups, criminals that prefer to act on their own, and the rest of the civil society.