Agent-based service composition through simultaneous negotiation in forward and reverse auctions

Abstract

Service composition is the act of taking several component products or services, and bundling them together to meet the needs of a given customer. In the future, service composition will play an increasingly important role in e-commerce, and automation will be desirable to improve speed and efficiency of customer response. In this paper, we consider a service composition agent that both buys components and sells services through auctions. It buys component services by participating in many English auctions. It sells composite services by participating in Request-for-Quotes reverse auctions. Because it does not hold a long-term inventory of component services, it must take risks; it must make offers in reverse auctions prior to purchasing all the components needed, and must bid in English auctions prior to having a guaranteed customer for the composite good. We present algorithms that is able to manage this risk, by appropriately bidding/offering in many auctions and reverse auctions simultaneously. The algorithms will withdraw from one set of possible auctions and move to another set if this will produce a better-expected outcome, but will effectively manage the risk of accidentally winning outstanding bids/offers during the withdrawal process. We illustrate the behavior of these algorithms through a set of worked examples.

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