Cooperation in Competitions – Constraint Propagation Strategies in Chain- bargaining

Electronic business motivates automatic bargaining: computers may not be as good bargainers as expert human bargainers, but by talking to a large number of traders on the Internet, they stand a better chance of getting good deals. While an end-seller may be interested in getting the highest profit from each negotiation, traders have to balance between making large profits in few deals (thus missing opportunities in the failed negotiations) and making smaller profits in larger number of deals. When a deal is to be constructed through a chain of middlemen, these middlemen have to cooperate (in order to construct the deal) while trying to maximize their own profits. The middlemen can be seen as propagating constraints along the chain, with the aim to maximize its profit while satisfying all the bargainers’ constraints (failing that, the chain will break down). In this paper, a simple chainbargaining problem is defined. It is used to study constraint propagation strategies, which are essential components of automatic bargaining.