Multiple-issue auction and market algorithms for the world wide web

The Internet is quickly changing the way business-to-consumer and business- to-business commerce is conducted in the world. The Electronic Revolution h as also spawned a trend of price wars and, in some instances, chaos, becaus e of the zero-sum nature of the electronic channel. The technology has crea ted an opportunity to get beyond the lose-lose nature of single issue price wars by determining sellers' and buyers' preferences across multiple issue s and encouraging negotiations, thereby creating possible joint gains for a ll parties. We develop simple multiple-issue algorithms and heuristics that could be used in electronic auctions and electronic markets, to match busi nesses to businesses and consumers based on dovetailing underlying interest s and preferences. We provide arguments that such dovetailed marches should help stabilize markets and make them more efficient. (C) 1999 Elsevier Sci ence B.V. All rights reserved.