Fig. 1 represents our information filtering model economy, consisting of a source agent that publishes news articles, C consumer agents that want to buy articles they are interested in, B broker agents that buy selected articles from the source and resell them to consumers, and a market infrastructure that provides communication and computation services to all agents. Each agent's internal parameters (defined below) are printed inside its ellipse. Solid lines represent the propagation of a sample article through broker 1. Broken lines indicate payment, and are labeled with symbols (explained below) for the amount paid.
Figure 1: Part of an idealized news filtering economy. Only a subset of
agents is shown. See text for interpretation of symbols.
The source agent publishes one article at each time step t.
It classifies articles according to its
own internal categorization scheme, assigning
each a category index j.
The nature of the categories, and the number J of them, do not change.
We represent this (hidden) classification scheme by a random process
in which an article is assigned category j with fixed probability
. The set of all is the source's category
prevalence vector 
. Each article is labeled with its category
index and
offered for sale to all brokers at a fixed price 
. For each
article
sold to each broker, the source pays a fixed transport cost 
.
Upon receiving an offer, each broker b decides whether or not to buy
the article using its own evaluation method, which may be
uncorrelated with the source's categorization scheme. For each
evaluation that it makes, the broker pays the system a fixed
computation cost 
. The broker's evaluation method
is approximated by a random process parametrized by its
interest vector 
: it buys an article labeled (by the
source) with category j with probability 
.
When broker b purchases an article, it immediately
sends it to a set of subscribing consumers, paying tranportation
cost for each. Subscribers examine the article, and pay
the broker 
if they want the right to use (``consume'') it.
The broker's internal parameters and are under its
direct control.
Subscriptions are represented by a
subscription matrix S, where 
if consumer c
subscribes to broker b, and 
if not. Subscriptions are
maintained only with the consent of both parties, and may be cancelled
by either. For example, a broker b might reject a consumer c
if the cost of sending articles exceeds the
expected payment from c, or c might reject b
if the cost of sifting through lots of junk
outweighs the benefit of receiving the rare interesting article.
The bilateral nature of the agreement is represented
by setting
,
where 
if broker b wants consumer c as a
subscriber and 0 if not; analogously,
represents consumer c's wishes.
When a consumer receives one or more copies of an
article from brokers to which it subscribes,
it pays the computation cost to determine whether it
is interested in the article, then decides whether (and from
whom) to buy it. Like the brokers, the consumers' evaluation function
is approximated by a stochastic process parametrized by an interest
vector 
: consumer c will be interested in an
article labeled with category j with fixed probability 
.
The consumer then determines whether the anticipated value V
for interesting articles warrants paying the price 
demanded by
the chosen broker 
, and if so purchases
the usage rights to the article.
An alternative formulation replaces the consumer's
computational cost with a negative value or cost 
incurred when ``junk'' is received.
The transformation 
,
renders these two views
equivalent.