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This paper presents a novel approach for designing and optimizing maintenance service contracts through the application of mechanism design theory. When offering a contract to its customer, the maintenance service provider seeks to specify contract terms - such as price, service features and incentives - that maximize the provider's profit, satisfy customer needs, allocate risks effectively and mitigate moral hazards. Optimal contract design has to account for asymmetric information and uncertainties associated with customer characteristics and behaviors. We illustrate our mechanism design approach by applying it to the contract design challenge of a gas turbine manufacturer, which also provides maintenance services for its aircraft engines. In our solution approach, we compute an optimal set of contracts. The entire set is presented to the customer and is designed such that the customer will accept one of the contract alternatives without negotiations. In addition to eliminating the costs and delays associated with negotiations, this approach also reveals the customer's private information to the service provider, which the provider can use to its benefit in maintenance management and future contract renewals. Furthermore, we design and incorporate win-win incentive mechanisms into the contracts, which reward the customer for actions that reduces maintenance costs. We present a deterministic and a stochastic mechanism design model, the latter accounting for uncertainties associated with customer actions, engine performance, and maintenance costs during the contract execution phase. Master of Science

The main aspiration behind the contributions of this research work is the achievement of simultaneuos delay-efficiency, autonomy, and security through innovative protocol design to address complex real-life problems. To achieve this, we take a holistic approach. We apply theoretical mathematical modeling implementing implications of social-economic behavioral characteristics to propose a cross-layer network security protocol. We further complement this approach by a layer-specific focus with implementations at two lower OSI layers. For the cross-layer design, we suggest the use of game and mechanism design theories. We design a network-wide consumer-centric and delay-efficient security protocol, DSIC-S. It induces a Dominant Strategy Incentive Compatible equilibrium among all rational and selfish nodes. We prove it is network-wide socially desirable and Pareto optimal. We address resource management and delay-efficiency through synergy of several design aspects. We propose a scenario-based security model with different levels. Furthermore, we design a valuation system to integrate the caused delay in selection of security algorithms at each node without consumer's knowledge of the actual delays. We achieve this by incorporating the consumer's valuation system, in the calculation of the credit transfers through the Vickrey-Clarke-Groves (VCG) payments with Clarke's pivotal rule. As the utmost significant contribution of this work, we solve the revelation theorem's problem of misrepresentation of agents' private information in mechanism design theory through the proposed design. We design an incentive model and incorporate the valuations in the incentives. The simulations validate the theoretical results. They prove the significance of this model and among others show the correlation of the credit transfers to actual delays and security valuations. In the layer-specific approach for the network-layer, we implement the DSIC-S protocol to extend current IPsec and IKEv2 protocols. IPsec-O and IKEv2-O inherit the strong properties of DSIC-S through the proposed extensions. Furthermore, we propose yet another layer-specific protocol, the SME_Q, for the datalink layer based on ATM. We develop an extensive simulation software, SMEQSIM, to simulate ATM security negotiations. We simulate the proposed protocol in a comprehensive real-life ATM network and prove the significance of this research work. Ph. D.