Networked Digital Public Goods Games with Heterogeneous Players and Convex Costs

TL;DR

This paper models networked digital public goods games with heterogeneous players and convex costs, analyzing Nash Equilibria, welfare solutions, and the impact of monetary redistribution on strategies and utilities.

Contribution

It introduces the first analysis of networked public goods games with convex costs, establishing NE existence, uniqueness conditions, and welfare optimization strategies.

Findings

Nash Equilibrium exists in the model.

Conditions for NE uniqueness are identified.

Monetary redistribution influences player utilities.

Abstract

In the digital age, resources such as open-source software and publicly accessible databases form a crucial category of digital public goods, providing extensive benefits for Internet. This paper investigates networked public goods games involving heterogeneous players and convex costs, focusing on the characterization of Nash Equilibrium (NE). In these games, each player can choose her effort level, representing her contributions to public goods. Network structures are employed to model the interactions among participants. Each player's utility consists of a concave value component, influenced by the collective efforts of all players, and a convex cost component, determined solely by the individual's own effort. To the best of our knowledge, this study is the first to explore the networked public goods game with convex costs. Our research begins by examining welfare solutions aimed at maximizing social welfare and ensuring the convergence of pseudo-gradient ascent dynamics. We establish the presence of NE in this model and provide an in-depth analysis of the conditions under which NE is unique. We also delve into comparative statics, an essential tool in economics, to evaluate how slight modifications in the model--interpreted as monetary redistribution--affect player utilities. In addition, we analyze a particular scenario with a predefined game structure, illustrating the practical relevance of our theoretical insights. Overall, our research enhances the broader understanding of strategic interactions and structural dynamics in networked public goods games, with significant implications for policy design in internet economic and social networks.