Agents that buy and sell

Institute for Visualization and Perception ResearchI VPR 1

© Copyright 1998 Haim Levkowitz

Agents that buy and sell

• Maes, Guttman, Moukas

• MIT Media Lab



Overview

• Physical vs. digital negotiations

• General agents overview

• Current electronic purchases

• Software agents properties and types

• Agents as mediators in e-commerce

• Future directions



Physical vs. digital negotiations

• “Real-world negotiations accrue transaction costs that may be too high for either consumers or merchants”

• “At the speed of bits, agents will strategically form and reform coalitions to bid on contracts and leverage economies of scale”



General agents overview• 1st generation agents

• Filter information

• Match people w/similar interests

• Automate repetitive behavior

• 2nd generation

• E-commerce ==> revolutionize

• business-to-business

• business-to-consumer

• consumer-to-consumer



Current electronic purchases• Automate

• Information

• Products, vendors

• Orders, payment

• Merchandise buyer: manually

• Seek merchants, products

• Enter purchase & payment info



Software agents properties and types

• Personalized

• Continuously running

• Semi autonomous

• ==> Optimize buying experience

• E.g., monitoring agents …



E.g., monitoring agents

• Monitor

• Quantity

• Usage patterns

• Invoke buying agent when low



Buying agents• Collect info: vendors, products• Evaluate offerings• Make decision to investigate: merchants,

products• Negotiate terms of transaction w/merchant• Place orders• Make auto payments



Agents as mediators in e-commerce• Buying behavior models & theories

• Six fundamental stages of buying process

• Role of agents as mediators in e-commerce

• Technologies / techniques in agents

• Negotiations

• Agent systems



Buying behavior models & theories• CBB: consumer buying behavior

• Other theories and models

• Nicosia

• Howard-Sheth

• Gugel-Blackwell

• Bettman info-processing

• Andreasen



Buying behavior models & theories (cont.)

• Approximation & simplification• Define similar fundamental stages• Help identify where agent technology

apply• Categorize existing systems

• Buying process: Six fundamental stages



Six fundamental stages of buying process

• Need identification

• Product brokering

• Merchant brokering

• Negotiation

• Pruchase and delivery

• Product service and evaluation



Need identification

• Buyer aware of unmet need

• Can motivate through product information



Product brokering

• Retrieve info: help determine what to buy

• Evaluate product alternatives

• ==> Buyer-provided criteria

• ==> “Consideration set” of products



Merchant brokering• Combine consideration set w/merchant-specific

info

• Evaluate merchant alternatives subject to buyer-provided criteria

• Price

• Warranty

• Availability

• Delivery time

• Reputation



Negotiation

• How to settle on terms of transaction

• Fixed

• Common in consumer products

• Negotiable

• Common in business-to-business

• Duration and complexity



Pruchase and delivery

• End of negotiation

• Other time (later?)



Product service and evaluation

• Post-purchase

• Product service

• Customer service

• Satisfaction evaluation

• Overall experience with decision



Role of agents as mediators in e-commerce

PersonaLogic

FireflyBargainFinder

Jango KasbahAuctionBot

T@T

Need ID

Productbrokering

x x x

Merchantbrokering

x x x

Negotiation x x x

Payment &delivery

Service &evaluation



Need identification

• Repetitive

• E.g., supplies

• Predictable

• E.g., habits

• How … monitors



Monitors

• Continuously running

• Monitor sets of

• Sensors

• Data streams

• Take actions

• When prespecified conditions apply

• Examples …



Examples

• Stock market

• E-commerce

• Amazon.com

• Notification agent (“eyes”)

• New book by

• author

• category



Product evaluation

• PersonaLogic ...

• Tete-a-Tete (T@T) ...

• Firefly ...



PersonaLogic• Define product features• Filter unwanted products

• Constraints on features• Constraint-satisfaction engine

• Return list of products• Satisfy shopper’s “hard constraints”• Prioritize by soft constraints



Tete-a-Tete (T@T)

• Comparable techniques

• Multiattribute utility theory

• Also

• Merchant brokering

• Negotiation



Firefly• Automated “word-of-mouth”

• Collaborative filtering• Compare ratings w/others’• Identify “nearest neighbors”

• Users w/similar tastes• Recommend products rated highly by

neighbors• Not yet rated by shopper



Firefly (cont.)• ==> Serendipitous finds

• Opinions of like-minded people

• Music

• Books

• More difficult to characterize

• Web pages

• Resraturants



Technologies / techniques for product evaluation

• Constrained-based ...

• Collaborative filtering ...

• Rule-based ...

• Data mining ...



Constrained-based

• PersonaLogic

• Tete-a-Tete



Collaborative filtering

• Firefly

• Other



Rule-based

• Broadvision, Inc.

• Personalize product offerings for individual customers



Data mining

• Patterns in customer purchasing behavior

• Help customers find products

• E.g., Engage



Merchant evaluation

• BargainFinder (Andersen Consulting) ...

• Jango …



BargainFinder (Andersen Consulting)• Online price comparison

• 9 merchant Web sites (at least)

• 1/3 blocked

• Don’t compete on price only

• Also value-added services

• Others asked to be included

• Want to compete on prices



Jango ...

• “Advanced BargainFinder”

• Solve merchant-blocking

• Requests originate from requestor’s site

• Not agent’s



Technologies / techniques for merchant evaluation

• Current: build comparison shopping agent• Largely manual, tedious• Virtual database

• E.g., Junglee, Inc.• Learning• ==> Semi auto composing of “wrappers” for Web

sites• Future ...



Future ...

• XML

• Mobile agents

• ==> Comparison-shopping agents

• Flexible

• Open ended

• Easier to implement



Negotiations

• Settle on

• Price

• Other terms of transaction



Negotiations: current

• Business-to-business

• Yes

• Retail

• Mostly fixed

• Only last 100 years



Dynamic negotiation of product price

• Benefits ...

• Impediments ...



Dynamic negotiations: benefits

• Don’t need to determine a-priori value of goods, services

• Take to marketplace

• ==> Limited resources allocated fairly

• To those who value them most



Dynamic negotiations: impediments• E.g., auctions

• Geographical colocation at auction place

• Complicated, frustrating

• Extended period

• Not fit for impatient / time-constrained

• Generally cost too high for both



Dynamic negotiations in digital world• Impediments gone• E.g.,

• OnSale• eBay’s AuctionWeb

• No geographic colocation• Yes: manage own negotiation strategies

• Agent tech. can help



Agent systems that negotiate

• Auction Bot (U Mich) ...

• Kasbah (MIT MediaLab) ...

• Tete-a-Tete (MIT MediaLab) ...



Auction Bot (U Mich)

• Internet auction server

• New auctions

• Auction type

• Parameters

• Clearing times

• Method for resolving tie bids

• Number of sellers permitted



Auction Bot (cont.)• Buyers & sellers bid

• Multilateral distributive negotiation protocol

• Advantage: API• ==> Users create own SW agents

• Autonomously compete in AB marketplace

• Users encode own bidding strategies



Kasbah (MIT MediaLab)

• Online

• Multiagent

• Consumer-to-consumer

• User (buy or sell)

• Create agent

• Give strategic directions

• Send off to centralized marketplace



Kasbah (cont.)

• Proactive• Seek out buyers / sellers• Negotiate on behalf of owners

• Goal• Complete acceptable deal on behalf of

user• Subject to set of user constraints



Kasbah (cont.): user constraints

• Initial bidding (asking) price

• Lowest (highest) acceptable price

• Date to complete

• Restrictions on parties to negotiate with

• Price change over time



Kasbah (cont.)

• After match, only valid action

• Buying agents offer bid

• No restriction on time, price

• Selling agents

• Binding “yes”

• “No”



Kasbah negotiation strategies

• Anxious

• Linear

• Cool-headed

• Quadratic

• Frugal

• Exponential

Seller Buyer



Kasbah negotiation strategies (cont.)

• Simplicity

• ==> Users understand what agents do



Kasbah: trust & reputation (“BBB”)• Upon completion both parties may rate

other party, e.g.,• Accuracy of product condition• Completion of transaction

• Agents use accumulated ratings• Determine agents of owners who fall

below specified reputation threshold ==> no negotiation



Tete-a-Tete (MIT MediaLab)• Unique approach to retail sales

• Consumer-owned shopping agents

• Merchant-owned sales agents

• Cooperative negotiations

• Multiple terms of transactions ...

• Bilateral argumentation

• Integrative negotiations ...



Multiple terms of transactions• Warranties

• Delivery times

• Service contracts

• Return policies

• Loan options

• Gift services

• Other merchant value-added services



Integrative negotiations

• Exchange of XML-based

• Properties

• Critiques

• Counter proposals



Tete-a-Tete: Negotiations (cont.)• E.g., shopping agent get

• Multiple proposals from sales agents

• Each proposal: complete product offering

• Product

• Configuration

• Price

• Other terms



Tete-a-Tete: Negotiations (cont.)

• Shopping agent

• Evaluate based on owner’s pref’s

• Multiattribute utilities

• Order

• Shopper: if dissatisfied can critique along any dimension(s)

• Agent broadcast pref’s changes to sales agents

• ==> Counter proposal



Tete-a-Tete: Negotiations (cont.)

• Consider

• Product features ...

• ==> Whom to buy from

• Merchant features ...

• ==> What to buy



Product features

• ==> Whom to buy from

• E.g., certain configuration only from certain merchant



Merchant features

• ==> What to buy

• E.g., get alternate product to get overnight delivery



Future directions

• Agents help buyer & seller

• Combat info overload

• Expedite specific stages

• First generation agents

• Create new markets ...

• Reduce transaction costs ...



Create new markets

• E.g., low cost consumer-to-consumer goods



Reduce transaction costs

• Effected most, initially

• Perishables

• Travel

• Theater / concert tickets

• Network BW availability

• Surplus inventory & commodities ...



Surplus inventory & commodities

• Gas

• Electricity

• Pencils

• Music

• Books



Future (cont.)• Still need changes• Agent technologies need to

• Better manage• Ambiguous content• Personalized preferences• Complex goals• Changing environments• Disconnected parties



Future (cont.)

• Standards

• Unambiguously & universally define

• Goods & services

• Consumer & merchant profiles

• Value-added services

• Secure payment mechanisms

• Interbusiness electronic forms



Future (cont.)

• Further

• New types of transactions

• Dynamic relationships among unknown parties

• Create dynamic business partnerships that exist only as long as necessary



Future (cont.)

• ==> 3rd generation agent-mediated e-commerce

• ==> Market --> perfect efficiency



Links• PersonaLogic: www.personalogic.com

• Firefly: www. firefly.com

• BargainFinder: bf.cstar.ac.com/bf

• Jango: jango.excite.com

• OnSale: www.onsale.com

• eBay AuctionWeb: www.ebay.com/aw

• AuctionBot: auction.eecs.umich.edu

• Kasbah: kasbah.media.mit.edu

• Tete-a-tete: ecommerce.media.mit.edu/tete-a-tete

Agents that buy and sell

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