Fair Exchange under Limited Trust

The Internet technology encourages electronic commerce between people and/or organizations that are physically distributed in different locations, which makes it difficult to trust each other. The existing work of electronic trades have proposed protocols and mechanisms with mediation by Trusted Third Parties (TTP), on the assumption that the third parties could be trusted without reservation by each party on a trade. Such an assumption, however, is sometimes not applicable to businesses via the Internet where various parties are trading each other, and it is not practical to give infinite trust to the parties regardless of the scale or period of trades. This paper proposes the degree of trust which limits the amount of money or goods that can be sent at one time according to the risk of the parties on trades. Each of risk limits is assumed to be determined through information from credit facilities or by the decision of each party. Then we discuss the feasibility of transactions within given credit limits and propose algorithms to judge the feasibility.