Institute for Visualization and Perception Research 1 © Copyright 1998 Haim Levkowitz Agents that buy and sell Maes, Guttman, Moukas MIT Media Lab

Institute for Visualization and Perception Research 2 © Copyright 1998 Haim Levkowitz Overview Physical vs. digital negotiations General agents overview Current electronic purchases Software agents properties and types Agents as mediators in e-commerce Future directions

Institute for Visualization and Perception Research 3 © Copyright 1998 Haim Levkowitz 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”

Institute for Visualization and Perception Research 4 © Copyright 1998 Haim Levkowitz 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

Institute for Visualization and Perception Research 5 © Copyright 1998 Haim Levkowitz Current electronic purchases Automate Information Products, vendors Orders, payment Merchandise buyer: manually Seek merchants, products Enter purchase & payment info

Institute for Visualization and Perception Research 6 © Copyright 1998 Haim Levkowitz Software agents properties and types Personalized Continuously running Semi autonomous ==> Optimize buying experience E.g., monitoring agents …

Institute for Visualization and Perception Research 7 © Copyright 1998 Haim Levkowitz E.g., monitoring agents Monitor Quantity Usage patterns Invoke buying agent when low

Institute for Visualization and Perception Research 8 © Copyright 1998 Haim Levkowitz 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

Institute for Visualization and Perception Research 9 © Copyright 1998 Haim Levkowitz 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

Institute for Visualization and Perception Research 10 © Copyright 1998 Haim Levkowitz Buying behavior models & theories CBB: consumer buying behavior Other theories and models Nicosia Howard-Sheth Gugel-Blackwell Bettman info-processing Andreasen

Institute for Visualization and Perception Research 11 © Copyright 1998 Haim Levkowitz 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

Institute for Visualization and Perception Research 12 © Copyright 1998 Haim Levkowitz Six fundamental stages of buying process Need identification Product brokering Merchant brokering Negotiation Pruchase and delivery Product service and evaluation

Institute for Visualization and Perception Research 13 © Copyright 1998 Haim Levkowitz Need identification Buyer aware of unmet need Can motivate through product information

Institute for Visualization and Perception Research 14 © Copyright 1998 Haim Levkowitz Product brokering Retrieve info: help determine what to buy Evaluate product alternatives ==> Buyer-provided criteria ==> “Consideration set” of products

Institute for Visualization and Perception Research 15 © Copyright 1998 Haim Levkowitz Merchant brokering Combine consideration set w/merchant-specific info Evaluate merchant alternatives subject to buyer-provided criteria Price Warranty Availability Delivery time Reputation

Institute for Visualization and Perception Research 16 © Copyright 1998 Haim Levkowitz Negotiation How to settle on terms of transaction Fixed Common in consumer products Negotiable Common in business-to-business Duration and complexity

Institute for Visualization and Perception Research 17 © Copyright 1998 Haim Levkowitz Pruchase and delivery End of negotiation Other time (later?)

Institute for Visualization and Perception Research 18 © Copyright 1998 Haim Levkowitz Product service and evaluation Post-purchase Product service Customer service Satisfaction evaluation Overall experience with decision

Institute for Visualization and Perception Research 19 © Copyright 1998 Haim Levkowitz Role of agents as mediators in e-commerce

Institute for Visualization and Perception Research 20 © Copyright 1998 Haim Levkowitz Need identification Repetitive E.g., supplies Predictable E.g., habits How … monitors

Institute for Visualization and Perception Research 21 © Copyright 1998 Haim Levkowitz Monitors Continuously running Monitor sets of Sensors Data streams Take actions When prespecified conditions apply Examples …

Institute for Visualization and Perception Research 22 © Copyright 1998 Haim Levkowitz Examples Stock market E-commerce Amazon.com Notification agent (“eyes”) New book by author category

Institute for Visualization and Perception Research 23 © Copyright 1998 Haim Levkowitz Product evaluation PersonaLogic... Tete-a-Tete Firefly...

Institute for Visualization and Perception Research 24 © Copyright 1998 Haim Levkowitz 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

Institute for Visualization and Perception Research 25 © Copyright 1998 Haim Levkowitz Tete-a-Tete Comparable techniques Multiattribute utility theory Also Merchant brokering Negotiation

Institute for Visualization and Perception Research 26 © Copyright 1998 Haim Levkowitz 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

Institute for Visualization and Perception Research 27 © Copyright 1998 Haim Levkowitz Firefly (cont.) ==> Serendipitous finds Opinions of like-minded people Music Books More difficult to characterize Web pages Resraturants

Institute for Visualization and Perception Research 28 © Copyright 1998 Haim Levkowitz Technologies / techniques for product evaluation Constrained-based... Collaborative filtering... Rule-based... Data mining...

Institute for Visualization and Perception Research 29 © Copyright 1998 Haim Levkowitz Constrained-based PersonaLogic Tete-a-Tete

Institute for Visualization and Perception Research 30 © Copyright 1998 Haim Levkowitz Collaborative filtering Firefly Other

Institute for Visualization and Perception Research 31 © Copyright 1998 Haim Levkowitz Rule-based Broadvision, Inc. Personalize product offerings for individual customers

Institute for Visualization and Perception Research 32 © Copyright 1998 Haim Levkowitz Data mining Patterns in customer purchasing behavior Help customers find products E.g., Engage

Institute for Visualization and Perception Research 33 © Copyright 1998 Haim Levkowitz Merchant evaluation BargainFinder (Andersen Consulting)... Jango …

Institute for Visualization and Perception Research 34 © Copyright 1998 Haim Levkowitz 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

Institute for Visualization and Perception Research 35 © Copyright 1998 Haim Levkowitz Jango... “Advanced BargainFinder” Solve merchant-blocking Requests originate from requestor’s site Not agent’s

Institute for Visualization and Perception Research 36 © Copyright 1998 Haim Levkowitz 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...

Institute for Visualization and Perception Research 37 © Copyright 1998 Haim Levkowitz Future... XML Mobile agents ==> Comparison-shopping agents Flexible Open ended Easier to implement

Institute for Visualization and Perception Research 38 © Copyright 1998 Haim Levkowitz Negotiations Settle on Price Other terms of transaction

Institute for Visualization and Perception Research 39 © Copyright 1998 Haim Levkowitz Negotiations: current Business-to-business Yes Retail Mostly fixed Only last 100 years

Institute for Visualization and Perception Research 40 © Copyright 1998 Haim Levkowitz Dynamic negotiation of product price Benefits... Impediments...

Institute for Visualization and Perception Research 41 © Copyright 1998 Haim Levkowitz 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

Institute for Visualization and Perception Research 42 © Copyright 1998 Haim Levkowitz 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

Institute for Visualization and Perception Research 43 © Copyright 1998 Haim Levkowitz 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

Institute for Visualization and Perception Research 44 © Copyright 1998 Haim Levkowitz Agent systems that negotiate Auction Bot (U Mich)... Kasbah (MIT MediaLab)... Tete-a-Tete (MIT MediaLab)...

Institute for Visualization and Perception Research 45 © Copyright 1998 Haim Levkowitz Auction Bot (U Mich) Internet auction server New auctions Auction type Parameters Clearing times Method for resolving tie bids Number of sellers permitted

Institute for Visualization and Perception Research 46 © Copyright 1998 Haim Levkowitz 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

Institute for Visualization and Perception Research 47 © Copyright 1998 Haim Levkowitz Kasbah (MIT MediaLab) Online Multiagent Consumer-to-consumer User (buy or sell) Create agent Give strategic directions Send off to centralized marketplace

Institute for Visualization and Perception Research 48 © Copyright 1998 Haim Levkowitz 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

Institute for Visualization and Perception Research 49 © Copyright 1998 Haim Levkowitz 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

Institute for Visualization and Perception Research 50 © Copyright 1998 Haim Levkowitz Kasbah (cont.) After match, only valid action Buying agents offer bid No restriction on time, price Selling agents Binding “yes” “No”

Institute for Visualization and Perception Research 51 © Copyright 1998 Haim Levkowitz Kasbah negotiation strategies Anxious Linear Cool-headed Quadratic Frugal Exponential SellerBuyer

Institute for Visualization and Perception Research 52 © Copyright 1998 Haim Levkowitz Kasbah negotiation strategies (cont.) Simplicity ==> Users understand what agents do

Institute for Visualization and Perception Research 53 © Copyright 1998 Haim Levkowitz 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

Institute for Visualization and Perception Research 54 © Copyright 1998 Haim Levkowitz 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...

Institute for Visualization and Perception Research 55 © Copyright 1998 Haim Levkowitz Multiple terms of transactions Warranties Delivery times Service contracts Return policies Loan options Gift services Other merchant value-added services

Institute for Visualization and Perception Research 56 © Copyright 1998 Haim Levkowitz Integrative negotiations Exchange of XML-based Properties Critiques Counter proposals

Institute for Visualization and Perception Research 57 © Copyright 1998 Haim Levkowitz 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

Institute for Visualization and Perception Research 58 © Copyright 1998 Haim Levkowitz 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

Institute for Visualization and Perception Research 59 © Copyright 1998 Haim Levkowitz Tete-a-Tete: Negotiations (cont.) Consider Product features... ==> Whom to buy from Merchant features... ==> What to buy

Institute for Visualization and Perception Research 60 © Copyright 1998 Haim Levkowitz Product features ==> Whom to buy from E.g., certain configuration only from certain merchant

Institute for Visualization and Perception Research 61 © Copyright 1998 Haim Levkowitz Merchant features ==> What to buy E.g., get alternate product to get overnight delivery

Institute for Visualization and Perception Research 62 © Copyright 1998 Haim Levkowitz Future directions Agents help buyer & seller Combat info overload Expedite specific stages First generation agents Create new markets... Reduce transaction costs...

Institute for Visualization and Perception Research 63 © Copyright 1998 Haim Levkowitz Create new markets E.g., low cost consumer-to-consumer goods

Institute for Visualization and Perception Research 64 © Copyright 1998 Haim Levkowitz Reduce transaction costs Effected most, initially Perishables Travel Theater / concert tickets Network BW availability Surplus inventory & commodities...

Institute for Visualization and Perception Research 65 © Copyright 1998 Haim Levkowitz Surplus inventory & commodities Gas Electricity Pencils Music Books

Institute for Visualization and Perception Research 66 © Copyright 1998 Haim Levkowitz Future (cont.) Still need changes Agent technologies need to Better manage Ambiguous content Personalized preferences Complex goals Changing environments Disconnected parties

Institute for Visualization and Perception Research 67 © Copyright 1998 Haim Levkowitz Future (cont.) Standards Unambiguously & universally define Goods & services Consumer & merchant profiles Value-added services Secure payment mechanisms Interbusiness electronic forms

Institute for Visualization and Perception Research 68 © Copyright 1998 Haim Levkowitz Future (cont.) Further New types of transactions Dynamic relationships among unknown parties Create dynamic business partnerships that exist only as long as necessary

Institute for Visualization and Perception Research 69 © Copyright 1998 Haim Levkowitz Future (cont.) ==> 3rd generation agent-mediated e- commerce ==> Market --> perfect efficiency

Institute for Visualization and Perception Research 70 © Copyright 1998 Haim Levkowitz Links PersonaLogic: Firefly: www. firefly.comwww. firefly.com BargainFinder: bf.cstar.ac.com/bfbf.cstar.ac.com/bf Jango: jango.excite.comjango.excite.com OnSale: eBay AuctionWeb: AuctionBot: auction.eecs.umich.eduauction.eecs.umich.edu Kasbah: kasbah.media.mit.edukasbah.media.mit.edu Tete-a-tete: ecommerce.media.mit.edu/tete-a-tete ecommerce.media.mit.edu/tete-a-tete