Rajan M. Lukose and Bernardo A. Huberman
Dynamics of Computation Group
Xerox Palo Alto Research Center
Palo Alto, CA 94304
huberman@parc.xerox.com
The explosive growth of the Internet has made possible an economic
transformation in which commerce will become largely electronic. In
this vision, the medium of communication and negotiation becomes a
distributed network of computers equipped with robust, secure and
trusted “cash” mechanisms. It is thus of paramount
importance to design mechanisms that will ensure timely and reliable
transactions in cyberspace. In this paper we present a methodology for
quantitatively managing the risk and cost of executing transactions in a
distributed network environment, and illustrate it with several concrete
examples under different pricing schemes.
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