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Maximizing Welfare Through Cooperative Negotiation In A Multi-Agent Internet Economy

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  • PRITHVIRAJ DASGUPTA

    (Department of Computer Science, University of Nebraska, Omaha, NE 68182, USA)

  • P. MICHAEL MELLIAR-SMITH

    (Department of Electrical and Computer Engineering, University of California, Santa Barbara, CA 93106, USA)

  • LOUISE E. MOSER

    (Department of Electrical and Computer Engineering, University of California, Santa Barbara, CA 93106, USA)

Abstract

E-commerce over the Internet has become an attractive means of conducting business in today's world. However, the principles of classical economics demand a fresh insight before they can be adapted to the market structure presented by the Internet. Here, we investigate markets for goods that are characterized by an experience-limited supply curve. We propose an algorithm that maximizes the welfare in the e-market by maximizing the combined profit of the buyers and sellers. For this, the buyers and sellers must reveal their value and cost curves to a trusted intermediary who can determine the transaction that maximizes their joint welfare. We show that accurate revelation of hidden profits offers better incentives, both to the buyers and the sellers, than inaccurate or incomplete revelation.

Suggested Citation

  • Prithviraj Dasgupta & P. Michael Melliar-Smith & Louise E. Moser, 2006. "Maximizing Welfare Through Cooperative Negotiation In A Multi-Agent Internet Economy," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 5(02), pages 331-351.
    • Handle: RePEc:wsi:ijitdm:v:05:y:2006:i:02:n:s0219622006001964
    DOI: 10.1142/S0219622006001964
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    References listed on IDEAS

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    1. Keeney,Ralph L. & Raiffa,Howard, 1993. "Decisions with Multiple Objectives," Cambridge Books, Cambridge University Press, number 9780521438834.
    2. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
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    Cited by:

    1. Jing Yan & Xinping Guan & Xiaoyuan Luo & Cailian Chen, 2017. "Formation Control and Obstacle Avoidance for Multi-Agent Systems Based on Virtual Leader-Follower Strategy," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 16(03), pages 865-880, May.

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