ICD to establish trust for transactions

Huberman, Wu and Zhang just published an article in Netnomics called “Ensuring trust in one-time exchanges: the QoS problem”. (Folks at UM can access through the library’s “Electronic Journals” access page.) They are interested specifically in the problem of purchasing from an IT service provider who does not have a verifiable reputation; this is a generic problem in transactions, but their modeling makes specific assumptions for this particular situation.

Summary from the paper:
In our model, a quality of service contract describes the likelihood that the service provider delivers the promised service. We have designed a mechanism that forces the provider to reveal his true assessment of the probability that he will be delivering a given service in a single interaction with a user/customer. We also solved the complementary truthtelling reservation problem of obtaining from the user his assessment of the true probability that a given level of resources will be required at the time of their delivery. In both cases, our mechanisms use a contingent contract to elicit true revelation of both QoS and likelihood of use through a pricing structure that forces the parties to make accurate assessments of their ability to do what they commit to.
They also apply the problem to situations in which service providers might overbook.


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