Sharpe ratio based pricing of Cognitive Radio access
Tadeusz Antoni Wysocki, Abbas Jamalipour · 2011
The use of licensed spectrum by Cognitive Radio (CR) enabled secondary users (SUs) impacts the Quality-of-Service (QoS) and ultimately, the revenue earned by Primary User (PU) license holders. It is therefore important to find appropriate pricing models for pricing spectrum for access by CR-based networks. Pricing of CR access rights can be modeled as an investment problem, which raises the issue of PU economic welfare preservation in the context of returns on its investment in spectrum licenses. By analyzing the impact of CR activity on the reward-to-variability ratio (Sharpe ratio) of returns on the spectrum investment, the degradation in economic welfare experienced by the PU as a result of SU activity can be quantified. In this paper, we examine the impact of a multiple PU environment and variable traffic characteristics on the dynamics of the Sharpe Ratio based pricing strategy. Numerical results indicate that with multiple spectrum license holders, the Sharpe Ratio based pricing framework will continue to maintain PU economic welfare but results in a reduced access price for SUs.