Surplus equivalence of levelled commitment contracts

In automated negotiation systems consisting of self-interested agents, contracts have traditionally been binding. Levelled commitment contracts were recently shown to improve expected social welfare even if agents decommit strategically in Nash equilibrium. Such contracts differ based on whether agents have to declare their decommitting decisions sequentially or simultaneously, and whether or not agents have to pay the penalties if both decommit. For a given contract, these protocols lead to different decommitting thresholds and probabilities. However, this paper shows that each of these protocols leads to the same expected social welfare when the contract price and penalties are optimized for each protocol. Our derivations allow agents to construct optimal levelled commitment contracts. We also show that such integrated bargaining does not hinder distributive bargaining.

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