Why You Should Charge Your Friends for Borrowing Your Stuff
This addresses inefficiencies in resource sharing for organizations and system designers, though it is incremental as it builds on existing game-theoretic models.
The paper tackles the problem of social inefficiency in sharing goods on social networks, where excessive purchases occur in Nash equilibria, and finds that charging free riders an access cost significantly reduces this inefficiency, as supported by theoretical analysis and simulations.
We consider goods that can be shared with k-hop neighbors (i.e., the set of nodes within k hops from an owner) on a social network. We examine incentives to buy such a good by devising game-theoretic models where each node decides whether to buy the good or free ride. First, we find that social inefficiency, specifically excessive purchase of the good, occurs in Nash equilibria. Second, the social inefficiency decreases as k increases and thus a good can be shared with more nodes. Third, and most importantly, the social inefficiency can also be significantly reduced by charging free riders an access cost and paying it to owners, leading to the conclusion that organizations and system designers should impose such a cost. These findings are supported by our theoretical analysis in terms of the price of anarchy and the price of stability; and by simulations based on synthetic and real social networks.