Agent-based Simulation of Online Trading

AbstractIt is evident that sustained cooperation among online traders is absolutely essential for ensuring the success of electronic markets. This research tries to explore the underlying relationship between reputation engineering system and cooperation level by employing ‘Agent Based Simulation Modeling’ approach. It attempts to establish a trust based reputation system and analyze its effect on the sustainability of mutual cooperation between online traders by taking into account key factors such as level of gullibility of online traders and the weight of influence given to their past behavior. The simulation result reveals the correlation between the Smoothing Constant and the Probability of Imitation. The maximum permissible probability of imitation to maintain full cooperation decreases with the increase in the smoothing constant. The mean trader profit decreases as the smoothing constant increases