A Diversity Dilemma in Evolutionary Markets

Peter R. Lewis, Paul Marrow and Xin Yao
In Proceedings of ICEC 2011: The Thirteenth International Conference on Electronic Commerce. ACM Press, 2011.

Markets are useful mechanisms for performing resource allocation in fully decentralised computational and other systems, since they can possess a range of desirable properties, such as efficiency, decentralisation, robustness and scalability. In this paper we investigate the behaviour of co-evolving evolutionary market agents as adaptive offer generators for sellers in a multi-attribute posted-offer market. We demonstrate that the evolutionary approach enables sellers to automatically position themselves in market niches, created by heterogeneous buyers. We find that a trade-off exists for the evolutionary sellers between maintaining high population diversity to facilitate movement between niches and low diversity to exploit the current niche and maximise cumulative payoff. We characterise the trade-off from the perspective of the system as a whole, and subsequently from that of an individual seller. Our results highlight a decision on risk aversion for resource providers, but crucially we show that rational self-interested sellers would not adopt the behaviour likely to lead to the ideal result from the system point of view.

title = "A Diversity Dilemma in Evolutionary Markets",
booktitle = "Proceedings of ICEC 2011: The Thirteenth International Conference on Electronic Commerce",
author = "Peter R. Lewis and Paul Marrow and Xin Yao",
location = "Liverpool, UK.",
publisher = "ACM Press",
year = "2011"