The Prisoners’ Dilemma in collaborative carriers’ request selection

Abstract

Logistics providers have to utilize available capacities efficiently in order to cope with increasing competition and desired quality of service. One possibility to reduce idle capacity is to build coalitions with other players on the market. While the willingness to enter such coalitions does exist in the logistics industry, the success of collaborations strongly depends on mutual trust and behavior of participants. Hence, a proper mechanism design, where carriers do not have incentives to deviate from jointly established rules, is needed. We propose to use a combinatorial auction system, for which several properties are already well researched but little is known about the auction’s first phase, where carriers have to decide on the set of requests offered to the auction. Profitable selection strategies, aiming at maximization of total collaboration gains, do exist. However, the impact on individual outcomes, if one or more players deviate from jointly agreed selection rules is yet to be researched. We analyze whether participants in an auction-based transport collaboration face a Prisoners’ Dilemma. While it is possible to construct such a setting, our computational study reveals that carriers do not profit from declining the cooperative strategy. This is an important and insightful finding, since it further strengthens the practical applicability of auction-based trading mechanisms in collaborative transportation.

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