On the Economics of P2P
Systems
Speaker
Coby Fernandess
Internet


Internet became a major force of change on
civilization.
The Internet itself is the largest distributed
computer system.
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
Client Server
 Web browsers servers.
 Relational database servers.
As computer networks evolve into more
complex system, there is a growing demand
for scalable and reliable system architecture.
Network Games
Algorithms, games, and the internet. [Papa
STOC01]
 The most significant characteristic of the
internet is its social-economic complexity.
 The Internet is built, operated, and used by
entities with diverse economic interests.
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
Surfers, ISP, Infrastructure provider., Web companies.
The mathematical tools and the insights most
appropriate for understanding the Internet
may come from game theory.
Peer-to-Peer Systems
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Connectivity between computers shifts from
centralized to highly distributed and symmetric
systems.
Initiated by the phenomenal popularity of p2p
file sharing applications.
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
Napster, Gnutella and BitTorrent.
Introduce pure symmetric (server-less)
distributed systems.
“web-communities" On the internet, where
peers voluntary share resources.
Example - Content Distribution


Popular File-sharing facilities such
as, BitTorrent and Emule.
Source may become choked with a
“flash crowd”.
Next
Collaborative Content Distribution
Now, leave
me alone!
Objective
Incentives for Cooperation

Design and implement distributed systems that
encourage user cooperation:
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I.e. prevent or limit “Free Riders”:
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incentive compatible p2p systems; inducing
cooperation from strategic peers.
Users who attempt to benefit from the community
resources without sharing their own resources.
Characteristics:
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Peers rational autonomous and unreliable.
No central authority.
Highly dynamic membership, (a.k.a. high turnover)
Monetary payments schemes
Service consumers pay the service providers.
 Incentive compatibility:
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Distributed Algorithmic Design Mechanism.
Impractical since they require an
infrastructure for accounting and payments.
–
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Decentralized payment schemes.
Ad hoc networks.
Trust and Reputation System


Trust is required for multiple entities to cooperate and share resources. Otherwise, either
parties refuse to interact – increased costs.
Trust and reputation play an important role in
most disciplines, including sociology, economics
and computer science.
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Trust is the subjective expectation a node has about
another node's future behavior, based on their history
Reputation is the perception a node creates through
past actions about its intentions and norms.
Trust-Based Schemes

Users can always base their actions on their
own personal history
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E.g., if A previously cooperated with me, I will now
cooperate with A
Numerous drawbacks to this approach
–
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Repeated interactions with same peer may be
infrequent
System boot-up.
Integration of new users.
Reputation-Based Schemes

Information about parties’ past behavior can
be disseminated through the network
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Decisions about future actions no longer based
on personal history alone.
Newcomers: (Sybil attack) Desirable for
network growth, but allows misbehaving
users escape the consequences.
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Irreplaceable pseudonyms requires central
authority.
Penalty to newcomers.
Collusive behavior.
Robust Incentive Techniques for Peer-toPeer Networks
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
Generalized Prisoner’s Dilemma (GDP) in
client/server encounter.
The GPD payoff matrix satisfies:
–
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Mutual cooperation has highest total payoff.
Defection (weakly) dominates cooperation.
Reputation System

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Use subjective reputation to deal with
collusion.
Max-flow algorithm works well (constant
mean time version which doesn’t scale)
Decision Function

Decision Function:
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Use client ‘s reputation.
Require converge to cooperation
Robust against defection strategies and
collision.
Generosity
Cooperate with entity X with probability:
 max_ flow( j   i ) 
min 
,1
 max_ flow(i   j ) 
"Third of humanity has not yet
made a phone call."