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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.
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