COALITION FORMATION IN P2P FILE SHARING SYSTEMS M.V.Belmonte, M. Díaz, J.L. Pérez-de-la-Cruz, R. Conejo E.T.S.I. Informática. Bulevar Louis Pasteur, Nº 35.Universidad de Málaga Málaga (SPAIN) {mavi,mdr,perez,conejo}@lcc.uma.es Abstract. P2P file sharing systems are distributed systems consisting of interconnected nodes able to self-organize in networks, with the purpose of sharing content. Recent empirical studies have shown that they suffer from freeloaders, that is, peers that consume many more resources or content than they contribute. In this paper we propose a coalition formation based incentive mechanism for P2P file sharing systems that improves the system performance for the coalition participant peers. In addition, it discourages free-loader like behavior. The mechanism presents a formal approach to the problem based on game theory that takes into account the rational and self-interested behavior of the peers. 1 Introduction P2P systems are distributed systems consisting of interconnected nodes able to self-organize in networks, with the purpose of sharing resources such as content, bandwidth, CPU cycles [1]. They differ from traditional distributed systems in that there is not a centralized server that controls the different nodes. Instead this, peers have a variable connectivity and can dynamically change their connections in order to adapt to failures and transitory populations of nodes. Concretely, P2P file sharing systems set up a network or pool of peers on Internet and provide facilities for searching and transferring files between them. Since these systems provide for a cheap platform for data-sharing that is highly scalable and robust, a great number of commercial and academic projects have been developed using this technology [5][9][1]. However, the performance and availability of these systems relies on the voluntary participation of their users, and so they may be highly variable and unpredictable [4]. Recent empirical studies have shown that a large fraction of the participants (20 to 40% of Napster and almost 70% of Gnutella peers) share little or no files [12]. This phenomenon is known as free-loading: peers that consume more resources than they contribute. One of the reasons of this problem is that the mechanisms used for downloading and sharing in the P2P file sharing systems are not designed taking into account the selfish or self-interested behavior of the peers. In fact, the P2P system's users act rationally trying to maximize the obtained benefits from using the system's shared resources [7]. So, it will be necessary to find mechanisms which provide incentives