Computational Challenges in E-commerce

Abstract

Companies and individuals are using computer networks to conduct increasing amounts of their daily business. Web search engines auctioned some $10 billion of ad space in 2007, accounting for almost half of all online advertising revenue. Sales at Amazon.com were $4.13 billion in the first quarter of 2008, including a fast-growing revenue stream from selling Web services to other e-commerce companies. At eBay, sales reached $15.7 billion in the second quarter, with 84.5 million active users. This explosion of large-scale e-commerce poses new computational challenges that stem from the need to understand incentives. Because individuals and organizations that own and operate networked computers and systems are autonomous, they will generally act to maximize their own self-interest--a notion that is absent from traditional algorithm design. In this article, we provide an overview of four areas of computation in which incentives play a crucial role: resource allocation, knowledge integration, peer production and interaction, and security and privacy.

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