Dividing the Wi-fi

When I moved in to my new house a year ago, among so many different issues was the internet/cable requirement. I am not a big TV fan, so I decided to subscribe only to internet. I do not use internet very often, and when I do so I do not need the whole band. I feel like most average users are the same way. So, it seemed really redundant to pay $50 a month for the internet subscription that I would only use few hours a month. On the other hand, I really needed it because of the school. I had this idea to talk to my neighbors but I hardly knew them so i could not. Result: I subscribed myself and am still paying $50 a month:)

So imagine 3 adjacent houses in a townhome community Say A, B and C. Each needs a low amount of internet usage at different times. Residents at A use internet only at weekends, residents at B use it only during the weekdays because they are working from home and residents at C demonstrate a more scattered but occassional internet usage at random hours. Let's assume that they know each other and they do not have internet service at this point. Cost of internet per month per house is $50. If A, B and C have this information in front of them and have some basic Game Theory perspective they would be able to create an efficient and fair division by understanding their requirements. If A and B cooperate and get the Wi-fi together, they would share the service and the cost, each paying $25 dollars for almost the same service experience. Obviously, division does not have to be exactly like that. For a 2-person coalition, the line between -50 dollars on x and y axis forms the ZOPA and Pareto efficient frontier, similar to Goreton and Bushville discussion in the class. Their BATNA is to install their own equipment and their reservation price is $50 each.

If C also joins the coalition, then the cost per person would reduce to $17 and the service would still be almost the same. Obviously, we need to assume that the Wi-fi router is located near the window at B and provides good service to neighbors. Residents could sign "Terms and Conditions" between the three of them pertaining to rules of service acquisition, usage, payment and termination. Note that the differences in the level and timing of internet usage are key to creating and achieving this efficient frontier. Another key issue here is the access to information among the neighbors...