Leveled Commitment Contracts with Myopic and Strategic Agents

Martin R. Andersson, Tuomas W. Sandholm

In automated negotiation systems consisting of self-interested agents, contracts have traditionally been binding, i.e., impossible to breach. Such contracts do not allow the agents to efficiently deal with future events. This deficiency can be tackled by using a leveled commitment contracting protocol which allows the agents to decommit from contracts by paying a monetary penalty to the contracting partner. The efficiency of such protocols depends heavily on how the penalties are decided. In this paper, different leveled commitment protocols and their parameterizations are empirically compared to each other and to several full commitment protocols. In the different experiments, the agents are of different types: self-interested or cooperative, and they can perform different levels of lookahead. Surprisingly, self-interested myopic agents reach a higher social welfare quicker than cooperative myopic agents when decommitment penalties are low. The social welfare in settings with agents that performed lookahead did not vary as much with the decommitment penalty as the social welfare in settings that consisted of myopic agents. For a short range of values of the decommitment penalty, myopic agents performed almost as well as agents that performed lookahead. In all of the settings studied, the best way to set the decommitment penalties was to choose low penalties, but ones that were greater than zero. This indicates that leveled commitment contracting protocols outperform both full commitment protocols and commitment free protocols.

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