On understanding price-QoS war for competitive market and confused consumers

• Published in: Computing 2019-09, Vol.101 (9), p.1327-1348
• Main Authors: Ait Omar, Driss, Outanoute, M’Hamed, Baslam, Mohamed, Fakir, Mohamed, Bouikhalene, Belaid
• Format: Article
• Language: English
• Subjects: Artificial Intelligence; Computer Appl. in Administrative Data Processing; Computer Communication Networks; Computer Science; Customer services; Customers; Equilibrium; Game theory; Information Systems Applications (incl.Internet); Pricing; Quality of service; Quality of service architectures; Rationality; Software Engineering; User satisfaction; Variation
• ISSN: 0010-485X; 1436-5057
• DOI: 10.1007/s00607-018-0642-5

How will bounded rationality influence telecommunication network fluctuations? Recently, there has been an increased research interest in telecommunication network pricing, which leads to many proposals for new pricing schemes motivated by different objectives namely: to maximize service provider’s revenue, to guarantee fairness among users and to satisfy quality of service (QoS) requirements for differentiated network services. In the present paper, we consider a system with N rational service providers (SPs) that offer homogeneous telecommunication services to bounded rational costumers. All SPs offer the same services and seek to persuade more customers in the same system, we model this conflict as a noncooperative game. On the one hand, each SP decide his policies of price and QoS in order to maximize his profit. One the other hand, we assume that the customers are boundedly rational and make their subscription decisions probabilistically, according to Luce choice probabilities. Furthermore, the customers decide to which SP to subscribe, each one may migrate to another SP or alternatively switch to “no subscription state” depending on the observed price/QoS. In this work, we have proved through a detailed analysis the existence and uniqueness of Nash equilibrium. We evaluate the impact of user’s bounded rationality on the equilibrium of game. Using the price of anarchy, we examine the performance and efficiency of equilibrium. We have shown that the SP s have an interest in confusing customers, which means more than the customers are irrational, the SP s earn more.