The value of temptation

Claudia V Goldman, Sarit Kraus

Research output: Contribution to journalArticlepeer-review


There is an implicit assumption in electronic commerce that induces the buyers to believe that their deals will be handled appropriately. However, after a seller has already committed to a buyer, he may be tempted by several requests though he will not be able to supply them all. We analyze markets in which a finite set of automated buyers interacts repeatedly with a finite set of automated sellers. These sellers can satisfy one buyer at a time, and they can be tempted to break a commitment they already have. We have found the perfect equilibria that exist in markets with a finite horizon, and with an unrestricted horizon. A significant result stemming from our study reveals that sellers are almost always tempted to breach their commitments. However, we also show that if markets' designers implement an external mechanism that restricts the automated buyers actions, then sellers will keep their commitments.
Original languageAmerican English
Pages (from-to)415-454
JournalElectronic Commerce Research
Issue number4
StatePublished - 2004


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