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1 Incentive Mechanisms for Internet Congestion Management: Fixed-Budget Rebate versus Time-of-Day Pricing Patrick Loiseau, Member, IEEE, Galina Schwartz, Member, IEEE, John Musacchio, Saurabh Amin and S. Shankar Sastry, Fellow, IEEE, Abstract—Mobile data traffic has been steadily rising in the pricing, many ISPs are now interested in moving to tiered past years. This has generated a significant interest in the deploy- pricing schemes [2], [3]. However, experiments have shown ment of incentive mechanisms to reduce peak-time congestion. that users prefer flat-rate pricing, and will pay a premium Typically, the design of these mechanisms requires information to avoid being metered [4], [5]. This makes the adoption ofabout user demand and sensitivity to prices. Such information real-time pricing particularly challenging. Thus, novel pricingis naturally imperfect. In this paper, we propose a fixed-budget rebate mechanism that gives each user a reward proportional mechanisms that balance the conflict between the need for to his percentage contribution to the aggregate reduction in network decongestion and the users’ preference for flat prices peak time demand. For comparison, we also study a time-of- are of great practical interest. day pricing mechanism that gives each user a fixed reward per Network bandwidth (and hence the level of congestion) isunit reduction of his peak-time demand.