Co-Investment with Payoff-Sharing Mechanism for Cooperative Decision-Making in Network Design Games

TL;DR

This paper proposes a game-theoretical framework combining non-cooperative and cooperative strategies to improve network design outcomes through co-investment and payoff-sharing mechanisms, demonstrated on real-world networks.

Contribution

It introduces a novel co-investment with payoff-sharing mechanism within a combined game-theoretical framework for cooperative decision-making in network design.

Findings

Enhanced social welfare and economic efficiency in case studies.

Improved environmental sustainability outcomes.

Fair distribution of benefits among operators.

Abstract

Network-based systems are inherently interconnected, with the design and performance of subnetworks being interdependent. However, the decisions of self-interested operators may lead to suboptimal outcomes for users and the overall system. This paper explores cooperative mechanisms that can simultaneously benefit both operators and users. We address this challenge using a game-theoretical framework that integrates both non-cooperative and cooperative game theory. In the non-cooperative stage, we propose a network design game in which subnetwork decision-makers strategically design local infrastructures. In the cooperative stage, co-investment with payoff-sharing mechanism is developed to enlarge collective benefits and fairly distribute them. To demonstrate the effectiveness of our framework, we conduct case studies on the Sioux Falls network and real-world public transport networks in Zurich and Winterthur, Switzerland. Our evaluation considers impacts on environmental sustainability, social welfare, and economic efficiency. The proposed framework provides a foundation for improving interdependent networked systems by enabling strategic cooperation among self-interested operators.