Interacting Agents and Discrete Choices in Logistics Outsourcing: A Conceptual Framework

Abstract

This paper develops a framework within which multiple agents make discrete choices in respect of a common objective - namely the delivery of a consignment from its origin to its final destination. Ideas from game theory and discrete choice are combined to define a set of choice experiments in which agents (e.g. shippers and freight forwarders) interact in arriving at a choice outcome. Forward and backward linking stated choice experiments provide a capability to evaluate sequential-move and ‘one-shot’ simultaneous move negotiation regimes. We propose an empirical framework in which a controlled experiment is implemented on a sample of freight forwarders and shippers moving specific consignments to an international or domestic destination. We concentrate on the contract environment where negotiation, deals, repeat business are the trend in agent choices in logistic chains, in contrast to open-market competitive decision making.