The Price of Simplicity

Abstract: We study revenue-maximizing pricing by a service provider in a communication network and compare revenues from simple pricing rules to the maximum revenues that are feasible. In particular, we focus on flat entry fees as the simplest pricing rule. We provide a lower bound for the ratio between the revenue from this pricing rule and
maximum revenue, which we refer to as the Price of Simplicity. We characterize what types of environments lead to a low Price of Simplicity and show that in a range of environments, the loss of revenue from using simple entry fees is small.

This is joint work with Srinivas Shakkottai (Texas A&M), Asu Ozdaglar (MIT) and Daron Acemoglu (MIT).

Biography: R. Srikant received his B.Tech. from the Indian Institute of Technology, Madras in 1985, his M.S. and Ph.D. from the University of Illinois at Urbana-Champaign in 1988 and 1991, respectively, all in Electrical Engineering.  He was a Member of Technical Staff at AT&T Bell Laboratories from 1991 to 1995. He is currently with the University of Illinois at Urbana-Champaign, where he is a Professor in the Department of Electrical and Computer Engineering and a Research Professor in the Coordinated Science Lab.


R. Srikant