Mitigating Provider Uncertainty in Service Provision Contracts

Abstract

Uncertainty is an inherent property of open, distributed and multiparty systems. The viability of the mutually beneficial relationships which motivate these systems relies on rational decision-making by each constituent party under uncertainty. Service provision in distributed systems is one such relationship. Uncertainty is experienced by the service provider in his ability to deliver a service with selected quality level guarantees due to inherent non-determinism, such as load fluctuations and hardware failures. Statistical estimators utilized to model this non-determinism introduce additional uncertainty through sampling error. Inability of the provider to accurately model and analyze uncertainty in the quality level guarantees can result in the formation of sub-optimal service provision contracts. Emblematic consequences include loss of revenue, inefficient resource utilization and erosion of reputation and consumer trust. We propose a utility model for contract-based service provision to provide a systematic approach to optimal service provision contract formation under uncertainty. Performance prediction methods to enable the derivation of statistical estimators for quality level are introduced, with analysis of their resultant accuracy and cost.

Supported in part by EPSRC grant EP/C009797/1 “Dynamic Operating Policies for Commercial Hosting Environment”, EPSRC Grant EP/F066937/1 “Economics-inspired Instant Trust Mechanisms for the Service Provision Industry” and EU Network of Excellence grant 026764 “Resilience for Survivability in IST”.