A study of Nash equilibrium in contribution games for peer-to-peer networks

Abstract

We consider a stylized model of content contribution in a peer-to-peer network. The model is appealing because it allows for linear-quadratic payoff functions and for very general interaction patterns among agents. Furthermore, when the model has a unique Nash equilibrium (NE) we find that it is defined by a network centrality measure (Bonacich 1987), with L1 and L2 norms of the Bonacich index vector providing aggregate contribution and social welfare. Furthermore, we find that NE are always (even when they are non-unique) computable by solving a linear complementarity problem. We study the network designer's problem of engineering the most efficient equilibrium outcome, proving that maximizing aggregate contribution can be reconciled with maximizing aggregate welfare. We also provide a partial characterization of optimal NE graphs and suggest different approaches for how a network designer can promote more efficient graph structures.