Prospect Pricing in Cognitive Radio Networks

TL;DR

This paper introduces prospect pricing in cognitive radio networks, accounting for human decision biases to optimize spectrum sharing and resource management, improving system robustness and efficiency.

Contribution

It develops a novel pricing and resource allocation framework based on Prospect Theory, addressing human behavioral deviations from traditional utility models in cognitive radio networks.

Findings

End-user under-weighting of service guarantees leads to resource under-utilization.

Prospect pricing enhances robustness against decision-making biases.

Preliminary human studies validate the proposed approach.

Abstract

Advances in cognitive radio networks have primarily focused on the design of spectrally agile radios and novel spectrum sharing techniques that are founded on Expected Utility Theory (EUT). In this paper, we consider the development of novel spectrum sharing algorithms in such networks taking into account human psychological behavior of the end-users, which often deviates from EUT. Specifically, we consider the impact of end-user decision making on pricing and management of radio resources in a cognitive radio enabled network when there is uncertainty in the Quality of Service (QoS) guarantees offered by the Service Provider (SP). Using Prospect Theory (a Nobel-Prize-winning behavioral economic theory that captures human decision making and its deviation from EUT), we design data pricing and channel allocation algorithms for use in cognitive radio networks by formulating a game theoretic analysis of the interplay between the price offerings, bandwidth allocation by the SP and the service choices made by end-users. We show that, when the end-users under-weight the service guarantee, they tend to reject the offer which results in under-utilization of radio resources and revenue loss. We propose prospect pricing, a pricing mechanism that can make the system robust to decision making and improve radio resource management. We present analytical results as well as preliminary human subject studies with video QoS.