Combinatorial Auctions for Supply Chain Formation
Supply chain formation presents difficult coordination issues for distributed
negotiation protocols. Agents must simultaneously negotiate production relationships
at multiple levels, with important interdependencies among inputs and outputs
at each level. Combi-natorial auctions address this problem by global optimization
over expressed offers to engage in compound exchanges. A one-shot combinatorial
auction that optimizes the reported value of the bids results in optimal
allocations with truthful bids. But autonomous self-interested agents have
an incentive to bid strategically in an attempt to gain extra surplus. We
investigate a particular combinatorial protocol consisting of a one-shot
auction and a strategic bidding policy. We experimentally analyze the efficiency
and producer surplus obtained in five networks, and compare this perfor-mance
to that of a distributed, progressive auction protocol with non-strategic
bidding. We find that producers can sometimes gain significantly by bidding
strategically. However, when the available surplus is small relative to
the consumersí values, the producersí strategic behavior may prevent the
supply chain from forming at all, resulting in zero gains for all agents.
We examine the robustness of the combinatorial protocol by investigating
agent incentives to deviate, identifying quasi-equilibrium behavior for
an example network.
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Last edited September 4, 2000 by firstname.lastname@example.org.