Dynamics of coalition formation in combinatorial trading

Abstract

This paper studies the dynamics of agent mediated combinatorial trading at the macroscopic level. The combinatorial marketplace consists of a retailer who wishes to sell bundles of items, and a large number of agents with different purchasing goals. These agents dynamically form coalitions to exploit the benefits of grouping based on their complementary needs. A novel physics based dynamic equation is proposed to capture the essence of the movements of agents among different sized coalitions. Simulation experiments are performed to study the global behavior of the agents and the effectiveness of the agent mediated combinatorial trading.