Risk and user preferences in winner determination

We discuss a solution to the winner determination problem which takes into account not only costs but also risk aversion of the agent that accepts the bids. We are interested in bids for tasks that have time and precedence constraints. We develope an equivalent unit approach to the group of tasks to analyze the system and use Expected Utility Theory as the basic mechanism for decision-making. Our theoretical and experimental analysis shows that Expected Utility is especially useful for choosing between cheap-but-risky and costly-but-safe bids. Moreover, we show how bids with similar costs and similar probabilities of being successfully completed but different time windows can be efficiently selected or rejected.

• Type: Conference
• Year: 2003
• Where: ACMICEC
• Authors: Güleser K. Demir, Maria L. Gini
• Keywords: ACMICEC 2003, ECommerce, Expected Utility, Expected Utility Theory, Winner Determination Problem