/Mechanisms for Coalition Formation and Cost Sharing in an Electronic Marketplace

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, April, 2003

Download Publication (PDF)

Copyright notice: This material is presented to ensure timely dissemination of scholarly and technical work. Copyright and all rights therein are retained by authors or by other copyright holders. All persons copying this information are expected to adhere to the terms and constraints invoked by each author’s copyright. These works may not be reposted without the explicit permission of the copyright holder.


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.

BibTeX Reference
author = {Cuihong Li and Shuchi Chawla and Uday Rajan and Katia Sycara},
title = {Mechanisms for Coalition Formation and Cost Sharing in an Electronic Marketplace},
year = {2003},
month = {April},
institution = {Carnegie Mellon University},
address = {Pittsburgh, PA},
number = {CMU-RI-TR-03-10},