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, Volume 101, Issue 9, pp 1327–1348 | Cite as

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

  • Driss Ait OmarEmail author
  • M’Hamed Outanoute
  • Mohamed Baslam
  • Mohamed Fakir
  • Belaid Bouikhalene
Article

Abstract

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 SPs have an interest in confusing customers, which means more than the customers are irrational, the SPs earn more.

Keywords

Pricing QoS Bounded rationality Nash equilibrium Luce choice probabilities 

Mathematics Subject Classification

93A30 90B18 91B06 

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Copyright information

© Springer-Verlag GmbH Austria, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Information Processing and Decision Support Laboratory, Faculty of Sciences and TechnicsSultan Moulay Slimane UniversityBeni MellalMorocco
  2. 2.Interdisciplinary Laboratory of Research in Sciences and Technologies, Faculty of Sciences and TechnicsSultan Moulay Slimane UniversityBeni MellalMorocco
  3. 3.Interdisciplinary Laboratory of Research in Sciences and Technologies, Polydisciplinary FacultySultan Moulay Slimane UniversityBeni MellalMorocco

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