Electronic Commerce & Agents Frank Dignum Utrecht University firstname.lastname@example.org
Overview • Historical overview • Definition of Electronic Commerce (EC) • Examples of EC • Electronic markets and auctions • Agents • The role(s) of agents in EC • Conclusions
Historical perspective • (Big) calculators • Central databases • distributed information and word processing • client/server connected databases • support of (administrative) internal processes (WFMS)
Historical perspective • Support of internal communication (groupware) • Knowledge management • Support of external communication (Internet & WWW) • Support of external processes (Electronic commerce)
Definition (?) Electronic Commerce is: Any form of business transaction in which the parties interact electronically rather than by physical exchanges or direct physical contact
Commerce Information exchange Product/service/… exchange
Information exchange • Partner/product search • negotiation, market, auction • contract • contract fulfilment (directives) • legal information • etc.
Product/service exchange • (micro-)payment • (intangible) product • logistics of products and services • subscription mechanisms
business Consumer Public agencies business 12/22
EC Applications • Supply chain management • Home shopping • Remote banking • On-line marketing and advertising • Distant learning • Procurement and purchasing • Video on demand
Examples of EC (B-C) • Retail • Internet bookshop • CDNow • Shopping malls • Auctions • Collective buying
Examples of EC (B-C) • Finance • ESI (stock market) • Electronic banking
Examples of EC (B-B) • Business to business support • Maxtrad (business information) • MEMO (Mediating and Monitoring EC) • Secure contracts (ICC) • Bolero (electronic document support) • Markets • Automotive industry (collective buying) • Retail world • Insurance private exchange of virtual products
Role of institutions • Facilitate the transactions • Provide efficient price discovery mechanism • Provide standard transaction protocols • Provide settlement mechanisms • Enhance trust through • Provision of info on potential partners • Legal provisions to back up contracts • Provide securities/guarantees • Provide regulations on behaviour during transactions and means to enforce them
Infrastructure for electronic markets • Banking facilities • Communication • confidentiality • integrity • authentication • non-repudiation • Transfer and storage of products • Advertising
Banking facilities • Different payment methods should be supported • Payment should be safe • Payment and delivery guaranteed
Communication • Some common language should be used. • Constructs in the language should have a precise and formal meaning. • Note: currencies should be clear • Contracts should be legally binding. • Obligations should be visible
Storage and transfer of goods • Physical products can be sold only once. Their digital representation can easily be copied and sold more than once. • Downloading of digital products should be possible. • Transport should be arranged for other products.
Advertisement • How is advertisement arranged? • Blackboard? • Shopping mall? • One-on-one advertisement allowed? • Format of advertisements? • Payed advertisements? • Who can advertise?
Types of markets • Direct transactions • shopping mall • classified ads • direct negotiation • Brokered transactions • distributors • brokers • auctions
Types of markets II • Direct transactions • direct contact buyer and seller • less structured transactions • influence market (institution) smaller • Brokered transactions • controlled contact between buyer and seller • transaction protocol very strict • institution has total control
Auctions • Only “negotiate” about price. • Fixed: • product specification • payment method • transport • delivery terms • etc.
Auctions • Sealed auctions • First priced sealed bid • Vickrey • Sealed double auction • Open auctions • Dutch auction • English auction
First price sealed bid • Rules (protocol): • Bidders submit a single sealed bid before deadline • Outcome: • Winner is highest bid at bid price • Optimal strategy: • Bid just below private value of item • With N bidders bid: v(N-1)/N
Vickrey • Rules (protocol): • Bidders submit a single sealed bid before deadline • Outcome: • Winner is highest bid at second highest price • Optimal strategy: • Bid private value of item
Sealed double auction • Rules (protocol): • Bidders and sellers submit a single sealed bid before deadline • Outcome: • Auctioneer determines a single market-clearing price and matches buyers and sellers • Optimal strategy: • Bid private value of item
Dutch auction • Rules (protocol): • Auctioneer calls out descending price. • Bidder calls out a bid • Outcome: • Winner is first bidder to call out at price bid • Optimal strategy: • Bid just below private value of item
English auction • Rules (protocol): • Bidders successively raise bid for item until one bidder remains • Outcome: • Winner is last bidder remaining at price of second-highest bidder • Optimal strategy: • Bid until private value of item, then drop out
Non-private value auctions • Value of item depends at least partly on the value others give it. • Resellable products (tasks) • treasury bills • Strategy now also depends on expectation or knowledge of the value others give the product.
Other issues on auctions • Bidder collusion • Lying auctioneer • Interrelated auctions
Examples of auctions • http://www.wehkamp.nl/Veiling/ • http://www.ebay.com/aw/ • http://www.onsale.com/ • http://www.band-x.com/ • http://www.auctionconnect.lycos.com/
Technologies in EC • EDI • WWW • Multimedia • Work Flow Management • Agents • Electronic payment, smart cards, etc. • ...
Agents • Agent properties: • autonomous • pro-active • reactive • social ability • learning • Agent functions: • information gathering and filtering • negotiation (simple like auction or ContractNet) • monitor long-term processes
Agents and electronic commerce • Agents for support: • information gathering and comparison (e.g. shopbots: firefly) • logistics • Agents as delegates: • only when trust is not important or easy • Price and risk are low • Process well defined
Agent operated markets • http://auction.eecs.umich.edu/ • http://www.iiia.csic.es/Projects/fishmarket/ • Stock market • Power trade
Agents for negotiation • Limited use due to complexity, but • Very useful for e.g. auctions with: • “Simple” world model • Predetermined interactions • Fixed rules • One shot relations • centralised infrastructure
Agents for negotiation Fully automated AMEC first in situations where: • Interactions are fast • Interactions are repeated • Trade is of relative small value • Process is repeated over long periods • Products are easy to specify Examples: stock trade, power trade and telecom