On the Mediation Price War of 5G Providers

Virtualization guarantees that, moving toward 5G, online services will be versatile and the creation of those will be quick, satisfying the interest of end-clients to a higher degree than what is plausible today. Telcos, cloud administrators, and online application suppliers will unite for conveying those services to clients around the world. Thus, in order to help their portability, or the simple geographic range of the offered application, the business arrangements among the actors must scale over numerous domains and a guaranteed nature of joint effort among different stakeholders is important. Therefore, the vision of the 5G environment is majorly established on the federation of these partners in which they can consistently strive towards the objective of making reliable resource slices and deploying applications within for a maximal geographic reach of clients. In this environment, business perspectives will significantly impact the technical capacity of the system: the business arrangements of the providers will innately decide the accessibility and the end-client costs of certain services. In this work, we model the business relations of infrastructure providers as a variation of network formation games. We infer conditions under which the current transit-peering structure of network providers stays unblemished, and we also draw the specifics of an envisioned setup in which providers create business links among each other starting with a clean slate.

A Structural Econometric Analysis of Network Formation Games Through Subnetworks

The objective of this paper is to identify and estimate network formation models using observed data on network structure. We characterize network formation as a simultaneous‐move game, where the utility from forming a link depends on the structure of the network, thereby generating strategic interactions between links. With the prevalence of multiple equilibria, the parameters are not necessarily point identified. We leave the equilibrium selection unrestricted and propose a partial identification approach. We derive bounds on the probability of observing a subnetwork, where a subnetwork is the restriction of a network to a subset of the individuals. Unlike the standard bounds as in Ciliberto and Tamer (2009), these subnetwork bounds are computationally tractable in large networks provided we consider small subnetworks. We provide Monte Carlo evidence that bounds from small subnetworks are informative in large networks.

Equilibrium computation in discrete network games

Counterfactual policy evaluation often requires computation of game‐theoretic equilibria. We provide new algorithms for computing pure‐strategy Nash equilibria of games on networks with finite action spaces. The algorithms exploit the fact that many agents may be endowed with types such that a particular action is a dominant strategy. These agents can be used to partition the network into smaller subgames whose equilibrium sets may be more feasible to compute. We provide bounds on the complexity of our algorithms for models obeying certain restrictions on the strength of strategic interactions. These restrictions are analogous to the assumption in the widely used linear‐in‐means model of social interactions that the magnitude of the endogenous peer effect is bounded below one. For these models, our algorithms have complexity O p ( n c ), where the randomness is with respect to the data‐generating process, n is the number of agents, and c depends on the strength of strategic interactions. We also provide algorithms for computing pairwise stable and directed Nash stable networks in network formation games.

Homophily and Social Norms in Experimental Network Formation Games

Field studies of networks have uncovered a preference to befriend people we perceive as similar according to some dimensions of our identity (“homophily”). Lab studies of network formation games have found that adherence to social norms of reciprocity and inequity aversion are also drivers of network choices. No study so far has attempted to investigate the role of both homophily and social norms in a controlled environment. At the beginning of our experiment, each player fills in a personal profile. Each player then views the profile of all other players and expresses a degree of perceived similarity between his/her profile and the profile of the other player. At this point, a repeated network formation game ensues. We find that: (1) potential homophily considerations triggered by the profile rating task did not measurably change the players’ behavior compared to the baseline; (2) reciprocity plays a significant role in the formulation of the players’ strategies, in particular lowering the probability that the player naively best responds to the network observed in the previous period. We speculate that reciprocation of past choices might be a more “available” aid in strategy-formulation than considerations related to the similarity of the other players.