In Amazon EC2, cloud resources are sold through a combination of an on-demand market, in which customers buy resources at a fixed price, and a spot market, in which customers bid for an uncertain supply of excess resources.\u00a0 Standard market environments suggest that an optimal design uses just one type of market.\u00a0 We show the prevalence of a dual market system can be explained by heterogeneous risk attitudes of customers.\u00a0 In our stylized model, we consider unit demand risk-averse bidders.\u00a0 We show the model admits a unique equilibrium, with higher revenue and higher welfare than using only spot markets. Furthermore, as risk aversion increases, the usage of the on-demand market increases.\u00a0 We conclude that risk attitudes are an important factor in cloud resource allocation and should be incorporated into models of cloud markets.<\/p>\n","protected":false},"excerpt":{"rendered":"
In Amazon EC2, cloud resources are sold through a combination of an on-demand market, in which customers buy resources at a fixed price, and a spot market, in which customers bid for an uncertain supply of excess resources.\u00a0 Standard market environments suggest that an optimal design uses just one type of market.\u00a0 We show the 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