For multi-hop ad hoc networks formed by individually owned nodes, the endpoints can only observe whether or not the end-to-end transaction was successful or not, but not the individual actions of intermediate nodes. Consequently, in the absence of properly designed incentive schemes, rational (i.e., selfish) intermediate nodes may choose to forward data packets at a very low priority or simply drop the packets at all, and it could put the blame on the unreliable wireless channel. Using a principal-agent model, we propose several efficient methods that can eliminate the hidden actions under hidden information in multi-hop wireless networks with high probability. We design several algorithmic mechanisms for a number of routing scenarios such that each selfish agent will maximize its utility (i.e., profit) when it truthfully declares its type (i.e., cost and its actions) and it truthfully follows its declared actions. Our simulations show that the payment by our mechanisms is only slightly larger than the actual cost incurred by all intermediate nodes.
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