Online Trading and Negotiation

Transcription

1 Online Trading and Negotiation Instructor: Jerry Gao Ph.D. San Jose State University URL: May, 2000

2 Outline - Introduction of Trading - Types of Negotiation Models - Traditional Negotiation Versus Electronic Negotiations - Negotiation Process - Negotiation Protocols - Agent-Based Negotiation Systems - Problems and Issues Jer0 All Rights Reserved

3 Introduction to Trading What is business trading? What is a business trading process? Business trading refers to trading activities in a business trading process. A business trading process refers to a process in which a group of trading parties to communicate and interact with one and another to bargain on a business deal by exchanging of goods and money. A business trading process can be classified into three types: - auction: - negotiation - exchange Jer

4 Introduction to Online Trading Trading Auction Exchange Bargain or Negotiation Jer

5 Introduction to Negotiation What is negotiation? - A negotiation process in which a group of agents communicate with one another to try and come to a mutually acceptable agreement on some matter. What is trading negotiation? - A trading negotiation process in which a group of trading agents communicate with one another to bargain for a business deal to reach a mutually reasonable agreement. Cardinality of the negotiation: - single-issue or multiple-issue - interactions: one-to-one, many-to-one, and many-to-many Negotiation styles: - manual and face-to-face negotiation - systematic and automatic negotiation Jer

6 Basic Concepts and Terms Competitive Negotiation: Competitive negotiations can be described as the decision-making process of resolving a conflict involving two or more parties over a single mutually exclusive goal. - Classified ad negotiation - Stock market negotiation - Retail auction negotiations Classified ad negotiation: Buyers and sellers are in ad hoc, bilateral, competitive negotiations with one another respectively for unique (but potentially similar) limited resources. Stock market negotiation: Within an unbiased, centralized marketplace, buyers and sellers are in multilateral, competitive negotiations with one another for limited resources. Retail auction negotiation: A number of buyers bargain with the same seller to gain the product in an auction process.

7 Basic Concepts and Terms b S b S b b S b S b b S b S b S b S b S b b S b S b Traditional Classified AD Market Stock Market Online Retain Auction Market

8 Basic Concepts and Terms There are several forms decision making processes for business negotiations: Cooperative negotiation: The cooperative negotiations can be described ad the decision-making process of resolving a conflict involving two or more parties over multiple interdependent, but nonmutually exclusive goals. The clear distinction between the competitive and cooperative protocols is the number of dimensions that can be negotiated across. Distributive negotiation: the decision-making process of resolving a conflict during a business deal involving two or more parties over a single mutually exclusi ve goal. Integrative negotiation: the decision-making process of resolving a conflict during a business deal involving two or more parties over multiple interdependent, but non-mutually exclusive goals.

9 Topic: Online Auction Classifications of Trading C2C Trading Customer Customer B2C Trading Business Customer B2B Trading Business Business

10 Classifications of Negotiations Buyer 1 Business Negotiation 1 Seller Buyer 1 Business n Negotiation Seller Buyer m Business Negotiation 1 Seller Buyer m Business Negotiation n Seller

11 Topic: Online Auction Types of Negotiation Models Negotiation in electronic commerce can be defined as the process by which two or more parties multilaterally bargain resources for mutual intended gain, using the tools and techniques of electronic commerce. There are several forms of negotiations: Bidding: Auction: a simple form of negotiation, in which a buyer specifies the product or service he or she wants to acquire from several suppliers and asks for their bids. Based on the bids, the buyer selects the supplier(s) from whom to order the goods or services. another form of negotiation, in which ha fixed auction protocol is followed. Bargaining: the most complex form of negotiation, involving the issuing of proposals and counterproposals between negotiation parties until a mutual agreement or disagreement is reached.

12 Topic: Online Auction Basics in Business Negotiation Process The heart of a business negotiation is a negotiable deal, which is modified by the participants of the negotiation with the aim of reaching a final deal or trade. The five key elements of the negotiation process are: A deal, which can be in various states such as negotiable, final offer from buyer or seller, or a settled trade. Participants such as buyers, sellers, and brokers. Messages sent by the participants to modify the deal, such as bids, offers, or price changes. Process flow describing how the state of the deal changes as a result of the messages sent by the participants. Messages sent to the participants as the deal changes.

13 General Bilateral Negotiation Model -State Transition Diagram Initial-request Initial-offer Initial-propose suggest requested offer Offered(x) agree agreed propose Proposed(x) reject rejected open request timeout timeout negotiating closed Jer

14 Multilateral Negotiation Model -State Transition Diagram mentioned amend mention pending second seconded vote voting count agreed call rejected Multilateral encounter timeout withdrawn withdrawn closed Jer

15 Promissory Negotiation Model -State Transition Diagram promise promised expire right request expired fulfilled waive commit pending overdue voting obligation fulfill rejected waived timeout closed Jer

16 Expanded Bilateral Negotiation Model -State Transition Diagram re-start open suggest subnegotiate question question requested request Partly rejected offer propose request question3rd questioned explain explained requested explain3rd Sub-negotiable reject-part offer Proposed third-party advice closed propose Offered investigating agree reject timeout continue continue delay continue closed agreed rejected timeout pending negotiable Jer

17 Electronic Negotiation Approaches There are three different approaches to support electronic business negotiations: Negotiation Server Agent-Based Negotiation Negotiation Network

18 Agent-Based Electronic Negotiations What is software agent? - Software agents are software entities that have been given sufficient autonomy and intelligence to enable them to carry out specified tasks with little or no human supervision. - Software agents acting on behalf of end users could substantially reduce the manual effort currently required. - Software agents can be used to automate many of the tasks prevalent in the buying process. - In automated negotiation, computational agents find and prepare contracts on behalf of the real-word parties they represent.

19 Agent-Based Electronic Negotiations Major benefits: Support distributed applications in open and heterogeneous environment. Major attributes of software agents: Autonomy, adaptability, and the capability to learn both from past actions and current environment, enabling them to react to evolving requirements. Limitations and issues: Security threats due to: Mobile software agents are vulnerable to malicious hosts. Difficult to deal with evil hosts from their abnormal behaviors during the negotiation sessions.

20 Agent-Based Electronic Negotiations Intelligent Agent Architecture: Web Client Agent Client Internet Web Server Market Server Auctions Intelligent Agents Negotiations Security

21 Mobile Intelligent Agent: MIAMAP (MIAMAP) Mobile Intelligent Agents: The MIAMAP (Mobile Intelligent Agents for Managing the Information Infrastructure Market Place) project attempts to show the use of relations in the negotiation process will improve the balance between the need of the individual agents and the needs of the overall system. The architecture consists of: The marketplace and its manager: It acts as a mediator between buyers and sellers. All agents must register with the manager before they can interact with other agents. When conflicts arise in the marketplace, the manager help buyers and sellers to resolve the conflicts. The customers (both buyers and sellers) use buyer agents and seller agents. Transaction sessions supporting simple and complex multi-agent negotiations.

22 MIAMAP: Mobile Intelligent Agents How Does It Work? The main components are: Active Virtual Pipe Domain (AVP) buys network resource from different connectivity providers, then provides high-level connectivity services to the virtual environment. Connectivity Provider Domain makes up the transport networks owned by different connectivity providers. Virtual Market Place Domain provides the venue that allows agents to exhibit their offerings and available resources. Virtual Enterprise Domain (VEB) includes the VE Builder (the component that handles negotiations, contracting, and advanced communication services. Agents are used to manage negotiations and contracting.)

23 MIAMAP: Mobile Intelligent Agents Mediation Process: Conflict Detection Rule Base Buyer s request Select case(s) Seller s model Seller found? yes Recommend to buyer no Rule base Look for dependencies yes Construct solution Dependencies? Propose solution no Generate solution using case-based reasoning no Solution accepted? yes Negotiation successful

24 MIAMAP: Mobile Intelligent Agents Solution generation via case-based reasoning: Retrieve similar cases Market place indices Customer s req. Select best case Construct or modify proposal Evaluation rule & rule base Failed cases Evaluate proposal Solution acceptable? no yes Send solution Select next best case no Case exhausted? yes Reject proposal

25 MIAMAP: Mobile Intelligent Agents Benefits: Support a variety of transaction types from simple buying and selling to complex multi-agent negotiations. Handle multiple buyers and sellers at the same time. Support automated negotiation processes and transactions. Provide intelligent recommendations for clients. Provide mediation process, and generate solution via case-based reasoning Limitations: Compatibility with existing technologies Others

26 Negotiation Server: IDEAL (IDEAL)Replicable Web-Based Server: A web-based negotiation server is a proposed architecture that uses an objectoriented database instead of agent-based technology. A research project known as Ideal (Internet-based Dealmaker for e-commerce) is currently in progress at the University of Florida, Gainesville, FL. The basic idea is to provide a server that can be replicated and installed at multiple sites to either replace existing web servers or to pair with the existing servers to provide negotiations capabilities. Web-Based GUI tools are provided to allow a user to specify requirements, constraints, negotiation strategic rules, and preference methods.quest. Both buyers and sellers use this interface to set up their environment prior to the initiation of a request. Once set up, the server acts on behalf of the client in all negotiations.

27 Negotiation Server: IDEAL Major Benefits: Security, flexibility, usability, and consistency. Support multi-lateral bargaining by providing both proposals and counterproposals. Use an active object-oriented database to manage the information, including data, constraint specifications, and strategic rules. Flexible to change strategic rules using a rule specification language. Limitations: High network traffic. Need to replace existing web servers, or to pair negotiation servers with web servers. All negotiation transactions are conducted over the Internet. Latency is a potential issue for time-critical applications. Lack of notification mechanism.

28 Negotiation Server: IDEAL How Does It Work? Negotiation servers provide the following services: A registration service to allow a buyer to specify the requirements and constraints of the goods he wants to acquire. This service allows a user to specify the information and constraints related to the goods and services. A negotiation proposal processing service to evaluate proposals and generate counter-proposals until either an agreement or disagreement is reached. An event and rule management service to detect events, manage events, and trigger rules relevant to posted events. A rule specification language is provided to allow users to change rules dynamically. A cost-benefit analysis service to allow a client to perform quantitative analysis on alternative proposals.

29 Negotiation Server: IDEAL Proposals/counter proposals Internet Proposals/counter proposals Web Server Web Server Negotiation Server A Negotiation Server B Expert Buyer Client Seller Client Expert User Inventory DB User

30 Negotiation Server: IDEAL - Proposal Process Flow incoming proposal Registered constraints Attribute constraint verification Inter attribute constraint verification Constraints satisfied Cost benefit analysis Constraint violations Constraint relaxation Generate combinations evaluate Report conflicts relax Strategic rules Final agreement Counter proposal