Strategic Joining and Optimal Pricing in the Hybrid Cloud System with Risk-sensitive Service Requests

Abstract

We investigate a hybrid cloud system consisting of a private cloud and a public cloud along with highly and lowly risk-sensitive customers (denoted by H-and L-customers, respectively). Customers arrive in the system according to a Poisson process, and upon arrival, they decide to join a private cloud, or to join a hybrid cloud, or refuse to join any cloud based on a reward-cost structure. Specifically, for H-customers, if their expected benefit of joining a private cloud is negative, they will abandon the hybrid cloud system. For L-customers, they will compare the expected benefits of joining each of two clouds and then choose the cloud with higher benefit. Based on customers' strategic behavior, we explore the optimal decision-making problem in the hybrid cloud system. In virtue of a queueing-game approach, we analyze the equilibrium joining strategies of two types of customers. Moreover, taking into account various cooperation scenarios between customers, the optimal joining strategies of customers in different cases are derived. It is found that to maximize the utility for all customers, low risk-sensitive customers should be encouraged to join the public cloud. Furthermore, we investigate the optimal pricing issue for cloud services with subsidiary and discuss the revenue-maximization pricing of these two cloud resources numerically.