online trading and negotiation instructor: jerry gao ph.d. san jose state university email:...

Online Trading and Negotiation

Instructor: Jerry Gao Ph.D.

San Jose State Universityemail: [email protected]

URL: http://www.engr.sjsu.edu/gaojerry

May, 2000

Topic: Online Trading and Negotiation

- Introduction of Trading

- Types of Negotiation Models

- Traditional Negotiation Versus Electronic Negotiations

- Negotiation Process

- Negotiation Protocols

- Agent-Based Negotiation Systems

- Problems and Issues

Jerry Gao Ph.D. 5/20000

Outline

All Rights Reserved


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


Introduction to Online Trading


Auction Exchange

Bargain or Negotiation

Trading


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


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.




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b

b

b

b

S

S

S

S

S

Traditional Classified AD Market

b

b

b

b

b

S

S

S

S

S

Stock Market

b

b

b

b

b

S

Online Retain Auction Market




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 non-mutually 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.


Classifications of Trading

Topic: Online Auction

C2C Trading

B2C Trading

B2B Trading

Business Business

Business

Customer Customer

Customer


Classifications of Negotiations


Business Negotiation

BusinessNegotiation

Business Negotiation

Buyer Seller

Buyer

Buyer Seller

Seller

1 1

1 n

1 m

BusinessNegotiation

Buyer Seller

m n


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: 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.

Auction: 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.


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.



General Bilateral Negotiation Model -State Transition Diagram


agreed

rejected

timeout

requested

Proposed(x)

Offered(x)

negotiatingclosed

agree

reject

timeout

suggest

offer

propose

open request

Initial-proposeInitial-request Initial-offer



agreed

rejected

withdrawn

pending voting

Multilateral encounterclosed

count

withdrawn

mentioned amend

timeout

call

Multilateral Negotiation Model -State Transition Diagram

seconded

vote

second

mention



expired

rejected

waived

right

voting

request

closed

fulfill

promised

pending

timeout

obligation

Promissory Negotiation Model -State Transition Diagram

overdue

expire

commit

fulfilled

promise

waive


Expanded Bilateral Negotiation Model -State Transition Diagram


agreed

rejected

timeout

requested Proposed

Offeredsubnegotiate

closed

agree

reject

suggest

request

propose

continue

request

open

offer

Partly rejected

re-start

offer

pending

continue

continue

propose

reject-part

questioned

explained

third-partyadvice

requested closed

delay

timeout

explain3rd

question3rdquestion

negotiable

Sub-negotiable

investigating

question explain


Electronic Negotiation Approaches


There are three different approaches to support electronic business negotiations:

• Negotiation Server

• Agent-Based Negotiation

• Negotiation Network


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.




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.




Intelligent Agent Architecture:

Web Client Agent Client

Internet

Web Server

Auctions SecurityNegotiations

Intelligent Agents

Market Server


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.



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.)

MIAMAP: Mobile Intelligent Agents



Mediation Process:


Conflict Detection

Select case(s)

Recommend to buyer

Look for dependencies

Negotiation successful

Construct solution

Seller found?

Dependencies?

Generate solution using case-based reasoning

Solution accepted?

Propose solution

Rule Base

Buyer’s request

Seller’s model

Rule base

yes

yes

yes

no no

no



Solution generation via case-based reasoning:


Retrieve similar cases

Select best case

Evaluate proposal

Reject proposalCase exhausted?

Solution acceptable?

Select next best case

Send solution

Market place indices

Customer’s req.

Failed cases

no

Construct or modify proposal

yes

yes

Evaluation rule& rule base

no



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



Negotiation Server: IDEAL


(IDEAL)Replicable Web-Based Server:

A web-based negotiation server is a proposed architecture that uses an object-oriented 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.




Major Benefits:

•Security, flexibility, usability, and consistency.•Support multi-lateral bargaining by providing both proposals and counter-proposals.•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.



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.





Web Server

Negotiation Server A

Buyer Client

Web Server

Negotiation Server B

Seller Client

Inventory DB

Expert

User

Expert

User

InternetProposals/counter proposals Proposals/counter proposals



Negotiation Server: IDEAL - Proposal Process Flow

incoming proposal Registered constraints

Attribute constraint verification

Inter attribute constraint verification

Generate combinations

evaluate

Report conflicts

relax

Final agreementCounter proposal

Constraint relaxationCost benefit analysis

Constraints satisfied Constraint violations

Strategic rules

online trading and negotiation instructor: jerry gao ph.d. san jose state university email:...

Documents

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