Mobile Social Services with Network Externality: From Separate Pricing to Bundled Pricing

Today, many wireless device providers choose to sell devices bundled with complementary mobile social services, which exhibit strong positive network externality. This paper aims to quantify the benefits of selling devices and complementary services under the following three strategies: separate pricing, bundled pricing, and hybrid pricing (both the separate and bundled options are offered). A comprehensive comparison of the above three strategies is carried out for two popular service models, namely physical connectivity sharing and virtual content sharing, respectively. We first study the physical service model where the provider (e.g., FON) offers users customized WiFi devices for indoor Internet access, and allows service subscribers to physically access all device owners' WiFi when traveling. Observing that all device-owners contribute to the connectivity sharing, we show, via a Stackelberg game theoretic approach, that bundled pricing outperforms separate pricing as long as the total cost of device and service is reasonably low to stimulate network externality. Further, hybrid pricing strictly dominates bundled pricing thanks to the pricing flexibility to keep high marginal profit of device-selling. Next, we investigate the virtual sharing service model where the provider (e.g., Apple) sells devices and device-supported applications. Different from the connectivity service model, in this model service subscribers directly contribute to the virtual content sharing, and the network externality can be fairly strong. We prove that hybrid pricing degenerates to bundled pricing if the network externality degree is larger than the average device valuation, which is in stark contrast with the connectivity service model in which hybrid pricing always outperforms bundled pricing

Fair Division of Indivisible Goods Among Strategic Agents

We study fair division of indivisible goods in a single-parameter environment. In particular, we develop truthful social welfare maximizing mechanisms for fairly allocating indivisible goods. Our fairness guarantees are in terms of solution concepts which are tailored to address allocation of indivisible goods and, hence, provide an appropriate framework for fair division of goods. This work specifically considers fairness in terms of envy freeness up to one good (EF1), maximin share guarantee (MMS), and Nash social welfare (NSW). Our first result shows that (in a single-parameter environment) the problem of maximizing welfare, subject to the constraint that the allocation of the indivisible goods is EF1, admits a polynomial-time, 1/2-approximate, truthful auction. We further prove that this problem is NP-Hard and, hence, an approximation is warranted. This hardness result also complements prior works which show that an arbitrary EF1 allocation can be computed efficiently. We also establish a bi-criteria approximation guarantee for the problem of maximizing social welfare under MMS constraints. In particular, we develop a truthful auction which efficiently finds an allocation wherein each agent gets a bundle of value at least $\left(1/2 - \varepsilon \right)$ times her maximin share and the welfare of the computed allocation is at least the optimal, here $\varepsilon >0$ is a fixed constant. We complement this result by showing that maximizing welfare is computationally hard even if one aims to only satisfy the MMS constraint approximately