A stable and efficient buyer coalition formation scheme for e-marketplaces

Abstract

Buyer coalitions are beneficial in e-marketplaces because they allow buyers to take advantage of volume discounts. However, existing buyer coalition formation schemes do not provide buyers with any means to declare and match their preferences or to calculate the division of the surplus in a stable manner. Concepts and algorithms for coalition formation have been investigated in game theory and multi-agent systems research, but because of the computational complexity, they cannot deal with thousands of buyers which could join a coalition in practice. In this paper, we propose a new buyer coalition formation scheme GroupBuyAuction. At GroupBuyAuction, buyers form a group based on a category of items. A buyer can post an OR-asking for multiple items within a category. An OR-asking is a list of items indicating that the buyer would buy any one of the items in the list with some particular reservation price. Sellers bid volume discount prices. The group leader agent splits the group into sub groups (coalitions), selects a winning seller for each coalition, and calculates surplus division among buyers. We prove that this scheme guarantees the stability in surplus division within each coalition in terms of the core in game theory. Simulation results show that, under most conditions, our scheme increases buyers' utility, and allows more buyers to obtain items compared to traditional group buying schemes, such as those used at existing commercial WWW sites.