2007 | OriginalPaper | Chapter
The Effect of Mediated Partnerships in Two-Sided Economic Search
Authors : Philip Hendrix, David Sarne
Published in: Cooperative Information Agents XI
Publisher: Springer Berlin Heidelberg
In this paper we investigate the effect of mediated partnerships over agents’ equilibrium strategies in two-sided economic search. A
mediated partnership
is formed when an agent acts as a mediator, establishing a partnership between a pair of agents it encountered along its search, thereby reducing the other agents’ amount of search. Surprisingly, this reduction in market friction induced by mediated partnerships does not always improve market efficiency. Use of mediated partnerships changes the equilibrium strategies used by agents in two-sided search models and introduces substantial computational complexity. This computational complexity is overcome with an innovative algorithm that facilitates equilibrium calculation.