1. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-1 When and why does haggling occur? - some lessons from a qualitative but computational simulation of negotiation Bruce Edmonds etc.* Centre for Policy Modelling Manchester Metropolitan University

2. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-2 *Acknowledgements Scott Moss (CPM) Juliette Rouchier (Grequam/CNRS) David Hales (no fixed abode) Rosaria Conte, Mario Paulucci (ISTC/CNR) Jan Rotmans (ICIS) Other members of the FIRMA project Working papers from the Kellogg centre for the study of negotiation

3. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-3 Outline of talk Introduction The simulation Some simple results Discussion But first …

4. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-4 A Digression: Against Numbers

5. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-5 OK, so not all uses of numbers are entirely wicked, for example: If it clearly represents something known to have numeric properties (e.g. money or temperature) If it is a post hoc summary of the outcomes of many parts If it simply is a way of implementing a structure that is justified as a representation in its own sake But not when the numbers are an essential part of the simulation mechanism and there is no justification for their numeric nature

6. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-6 What’s wrong with numbers? They are too easy to use –They are often used to represent things whose nature is fundamentally qualitative –Representing processes in a qualitative way is more difficult and costly –Frames the way people think about things –Can imply a false generality They are very difficult to use well –Many subtle traps (e.g. Polhill et al. talk) –Difficult to interpret onto complex phenomena safely

7. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-7 Numbers are often used… …even when there is no good representational reason for doing so because… …it makes it look like real science (though hard equations or logic is even better) …other people use numbers (e.g. economists) …it is convincing (especially if you have some nice graphs) …it is easy (availability of analytic tools) …they could not think of any other way of doing it (frequently!)

8. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-8 Some properties of numbers See “measure theory” in the philosophy of science 1930-1970 for axioms and precise formulation Unique labels: but then you can not use comparisons or arithmetic Total ordering: but then you can not use arithmetic Exact values: what is being represented must be exact (no measurement involved) Approximate values: you need to be very careful about errors and comparisons Weak properties Strong properties

9. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-9 In particular numbers are not suitable for representing… Variety (vs. variation of a measure) Information (vs. probability or entropy) Usefulness (vs. utility) Preference (vs. a total order) Value (vs. price) In fact … almost any mental property (unless there is convincing evidence to the contrary) …except where it is known that there is some underlying process ensuring uniformity and this use is well validated within the context of use

10. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-10 Questions to ask of a social simulation which uses numbers Are the numbers just a way of implementing something that is not really numerical or do the numbers represent something numerical? Does what is represented by a number obey the properties of numbers that are utilised in the simulation? –e.g. If reals are used for preferences how do we know they are transitive, complete, dense? Is the use justified in this case - is it simply a case of thoughtless imitation/laziness? What does number/variable mean? Is there a better way of doing this?

11. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-11 Introduction: About negotiation

12. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-12 Van Boven and Thompson (2001) - Kellogg working papers (on web) Basic approach We propose that negotiation is best viewed as a problem solving enterprise in which negotiators use mental models to guide them toward a “solution.” Where they define “mental models” as … … mental representations of the causal relations within a system that allow people to understand, predict, and solve problems in that system … Mental models are cognitive representations that specify the causal relations within a particular system that can be manipulated, inspected, “read,” and “run”…

13. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-13 Different “levels” that occur in negotiations Action bargaining e.g. If you hold the door open, I will carry the box Viewpoint communication/exchange e.g. however high you build dykes there will sometimes be enough rain to cause flooding Goal reformulation/change/discussion e.g. I know you think this is expensive, but consider how much money you will save over the years to come Meta-discussion about the process itself e.g. we are not getting anywhere lets get a beer

14. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-14 The model: A qualitative but computational simulation of bargaining

15. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-15 In this model the participants don’t necessarily … …have similar beliefs about the domain …have any built in drive towards agreement...have knowledge about other’s beliefs …agree upon the current state of world …have similar preferences among states …have the ability to work out optimal action …have an underlying utility function or even a complete and transitive set of preferences …come to any agreement or understanding

16. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-16 However I do assume that… …participants have common labels for actions so communication can occur …the preferences of individuals are based on their beliefs and these judgements …rounds of communication occur off-line …each possible outcome is judged on a limited number of independent properties (!) …utterances and actions are public (!) …participants are honest w.r.t. beliefs (!) …goals, judgements, beliefs etc. do not change during the negotiation (!)

17. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-17 The structure of the simulation Fixed number of participants Time structured into phases of negotiation then doing agreed actions etc. Each agent has belief network of states (the nodes) and arcs (conjunctions of actions) representing their view of cause and effect –Actions can cause changes of state –Each node has properties it is judged by –At each node certain actions are possible

18. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-18 Each agent, each negotiation round does the following: looks for accessible states that are preferable to the current one (using judgements on properties of states that are near current) makes requests or conditional offers in order to get to that state (if not already made) examines offers and requests for possible agreements and suggests them agrees to those acceptable to self if all relevant parties agree then do actions as they become possible in action phase The negotiation results from the interaction of agents with different belief networks etc.

19. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-19 Messages: Can someone please some-actions so we can achieve some-state? I will some-actions if others some-other- actions. I agree to some-actions if others some-other- actions. Reports: Agent-name has done some-action. (State of Agent-name ) is: some-state.

20. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-20 Example belief networks A Possible Citizen’s view A Possible Government’s view

21. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-21 Trade-offs in the design Designed to be consistent with some observations of negotiations (descriptive) Representation of participants’ beliefs is potentially amenable to participatory techniques of elicitation But also expressive enough so that it can be adapted to investigate observed negotiations Is also easily extendable to further levels

22. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-22 Simple results: Buying a car

23. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-23 Buying a car 2x2x2x2=16 possible variations

24. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-24 Example output (I) Seller: Can someone please Pay10000 so we can achieve GetLittle? Buyer: I will Pay10000 if others GiveCarCheaply. Seller: I will GiveCarCheaply if others Pay10000. Buyer: Can someone please Pay20000 and GiveCarExpensively so we can achieve CarSoldExpensively? Buyer: I will Pay10000 if others Pay20000 and GiveCarExpensively. Seller: I agree to GiveCarCheaply if others Pay10000 Buyer: I agree to Pay10000 if others GiveCarCheaply Buyer has done Pay10000. Seller has done GiveCarCheaply. (State of Seller) is: CarSoldCheaply. (State of Buyer) is: CarSoldCheaply. Seller does not think buyer would pay 20000; seller would give car for 10000; buyer would not pay 20000; and buyer thinks seller would sell for 10000.

25. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-25 Example output (II) Seller: Can someone please Pay10000 so we can achieve GetLittle? Buyer: I will Pay20000 if others GiveCarExpensively. Seller: I will GiveCarCheaply if others Pay10000. (State of Seller) is: Start. (State of Buyer) is: Start. Buyer does not offer to Pay10000 for car because it thinks the seller would not sell for that. Seller does not think buyer would pay 20000; seller would give car for 10000; buyer would pay 20000; and buyer does not think seller would sell for 10000.

26. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-26 Example output (III) Buyer: I will Pay10000 if others GiveCarCheaply. Seller: Can someone please Pay20000 so we can achieve GetLots? Buyer: I will Pay20000 if others GiveCarExpensively. Seller: I will GiveCarExpensively if others Pay20000. Seller: Can someone please Pay10000 so we can achieve GetLittle? Buyer: I agree to Pay20000 if others GiveCarExpensively Seller: I agree to GiveCarExpensively if others Pay20000 Seller: I will GiveCarCheaply if others Pay10000. Buyer has done Pay20000. Seller has done GiveCarExpensively. (State of Buyer) is: CarSoldExpensively. (State of Seller) is: CarSoldExpensively. Seller does think buyer would pay 20000; seller would give car for 10000; buyer would pay 20000; and buyer does think seller would sell for 10000.

27. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-27 Buying a car: outcome summary

28. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-28 Discussion

29. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-29 Some observations (At least) two kinds/phases of negotiation in this model 1.Searching for one set of actions that participants can agree to 2.Trying to determine which of the possible agreements will occur Case (1) more characterised by honesty than (2) because the signalling of possibilities can determine the outcomes. This may depend on whether it is more important to get an agreement or to get the best at risk of failure.

30. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-30 A request… Can you give me ideas as how I might gain access to… …transcripts of real negotiations with enough detail to distinguish the sort of offers, communications etc. I have here… …where there is some evidence about the beliefs and goals of the participants… …and ideally where changes of belief, goals etc. are signalled or otherwise indicated.

31. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-31 Questions/future directions? Test hypothesis that there are two phases/kinds of negotiation Can this be embedded in other simulations in a credible way? How does it compare to other models (e.g. Rouchier and Hales’ paper) Using this testbed to help inform observations about real negotiations? As a participatory tool? (Hexagon method in Zurich Water game)

32. When and why does haggling occur?, 1 st ESSA Conference, Groningen, September 2003, http://cfpm.org/~bruce slide-32 Bruce Edmonds bruce.edmonds.name Centre for Policy Modelling cfpm.org The End