Distributed Optimal Contract for Data Rewarding With Network Effects

Data rewarding is a novel business model that leads to an economic trend in mobile networks. In this scheme, the advertiser incentivizes mobile users (MUs) to watch advertisement (ads) and, in return, receive a reward in the form of mobile data. In this work, we model the interaction between an advertiser who has asymmetric information about MUs and MUs who are connected to each other under a network, using the contract theory approach. We obtain the necessary and sufficient conditions for an optimal and practical contract to motivate MUs to participate in the data rewarding scheme and encourage them to declare their private information truthfully. The formulation of this contract is a nonconvex-constrained optimization problem. Using lemmas and propositions, we reformulate the initial optimization problem that is challenging to solve as an optimization problem with convex constraints and prove that these two problems are equivalent. Then, with the help of a distributed and nonconvex algorithm, we obtain the amount of ads demand and incentive reward.