Mechanisms for Coalition Formation and Cost Sharing in an Electronic Marketplace

Cuihong Li, Shuchi Chawla, Uday Rajan, and Katia Sycara
tech. report CMU-RI-TR-03-10, Robotics Institute, Carnegie Mellon University, May, 2003


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Abstract
In this paper we study the mechanism design problem of coalition formation and cost sharing in an electronic marketplace, where buyers can form coalitions to take advantage of discounts based on volume. The desirable mechanism properties include stability(in the core) and incentive compatibility with good efficiency, concepts from the perspectives of cooperative game theory and non-cooperative game theory. We analyze the problem from both these perspectives and establish relationships between the solution concepts. We also present a group of reasonable mechanisms that are derived from the two perspectives. Empirical results show positive correlation between stability and incentive compatibility(efficiency). The mechanism which shares the coalition cost in an egalitarian way is the best in terms of both stability and incentive compatibility.

Notes
Associated Center(s) / Consortia: Center for Integrated Manfacturing Decision Systems
Associated Lab(s) / Group(s): Advanced Agent - Robotics Technology Lab
Associated Project(s): Reusable Environment for Task Structured Intelligent Network Agents

Text Reference
Cuihong Li, Shuchi Chawla, Uday Rajan, and Katia Sycara, "Mechanisms for Coalition Formation and Cost Sharing in an Electronic Marketplace," tech. report CMU-RI-TR-03-10, Robotics Institute, Carnegie Mellon University, May, 2003

BibTeX Reference
@techreport{Li_2003_4351,
   author = "Cuihong Li and Shuchi Chawla and Uday Rajan and Katia Sycara",
   title = "Mechanisms for Coalition Formation and Cost Sharing in an Electronic Marketplace",
   booktitle = "",
   institution = "Robotics Institute",
   month = "May",
   year = "2003",
   number= "CMU-RI-TR-03-10",
   address= "Pittsburgh, PA",
}