Incentives Against Hidden Action in QoS Overlays

Peer-to-peer networks providing QoS-enabled services are sensitive to hidden action situations, where the actions of a server peer are hidden from the peers who receive services from it. This is because server peers can choose to strategically minimize their effort, and client peers may be unable to distinguish between cases where the server exerted insufficient effort and cases where the server kept its advertised effort levels but the end-to-end conditions in the network were sufficiently adverse. We propose a principal-agent model for hidden action that gives server peers sufficient incentives to meet their advertised effort levels, without client peers having to decide for each transaction whether the outcome was due to server behavior or network conditions. This allows peers to draft contracts that provide incentives for truthful revelation of QoS capabilities, and to have predictable transaction quality. We then exemplify the model for the case of a mesh-based, pull-oriented streaming system with low delay requirements. For this case, we show how to estimate the model parameters a function of the prevailing network conditions, and how to enforce contract fulfillment through a reciprocative strategy.