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Unenforced E-commerce transactions

1997; IEEE Computer Society; Volume: 1; Issue: 6 Linguagem: Inglês

10.1109/4236.643936

1941-0131

Tüomas Sandholm,

Digital Platforms and Economics

Electronic commerce currently relies on traditional third party enforcement mechanisms that don't necessarily translate well to cyberspace. Chunking algorithms offer one possibility for unenforced transactions between self motivated agents. This method enables transactions in settings where the parties cannot identify each other, or where litigation is not viable. It also allows computational agents to be more autonomous by not requiring them to be strictly tied to the real world parties they represent. In cases where this type of unenforced exchange is possible, it is preferable to the strictly enforced mode of exchange because it saves enforcement costs (for example, litigation costs or operations costs of trusted third party intermediaries) and it is insensitive to enforcement uncertainties. The method is based on managing the exchange between two agents-a supplier and a demander-so that the gains from completing the exchange (cooperating according to a contract) at any point are larger for both agents than the gains from terminating it (defecting the exchange prematurely by vanishing).