An Agent-Based Framework for Assessing the Cost of Committal Search in Supply Networks

Abstract

The common assumption of unbounded rationality overlooks the facts that decision makers hold beliefs that influence their choices, and that agreement search between agents with conflicting interests is in itself a costly process. As a consequence, the actual cost of negotiation is seldom considered in optimisation literature. The aim of this paper is to contribute to the development of decision methods that distinguish between the costs of intra-agent (deliberative) and inter-agent (committal) searches of information by using a behaviour model produced by optimising agents’ profit subject to the Cobb-Douglas production function. We propose and test a computational model of rent-seeking, haggling agents for explicitly assessing the cost of committal search. Simulation experiments show that the strategic value of good initial price estimates is higher when these estimates are very close to the actual equilibrium prices, and that agreements may be reached quicker by more selfish agents.