Introduction

With the advent of the Internet and other modern information and communication technologies, a magnificent opportunity has opened up for introducing new, innovative models of commerce, markets, and business. Creating these innovations calls for significant interdisciplinary interaction among researchers in computer science, communication networks, operations research, economics, mathematics, sociology, and management science. In the emerging era of new problems and challenges, one particular tool that has found widespread applications is game theory and mechanism design. Application areas where game theory and mechanism design have been extensively used in recent times include: Internet advertising, spectrum and bandwidth trading, electronic procurement, logistics, supply chain management, grid computing, wireless networks, peer-to-peer networks, social networks, and many other emerging Internet-based applications. In this monograph, we use the phrase network economics to describe the above application areas. Our focus in this monograph is to explore game theoretic modeling and mechanism design for problem solving in network economics. In this introductory chapter, we first present four examples of representative problems that motivate the use of game theory and mechanism design. Next, we provide a brief introduction to mechanism design. We conclude the chapter with a chapter-by-chapter outline of the monograph.