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Electronic Commerce & Agents Frank Dignum Utrecht University dignum@cs.uu.nl 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

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electronic commerce agents

Electronic Commerce & Agents

Frank Dignum

Utrecht University


  • 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
Historical perspective
  • (Big) calculators
  • Central databases
  • distributed information and word processing
  • client/server connected databases
  • support of (administrative) internal processes (WFMS)
historical perspective4
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


Information exchange

Product/service/… exchange

information exchange
Information exchange
  • Partner/product search
  • negotiation, market, auction
  • contract
  • contract fulfilment (directives)
  • legal information
  • etc.
product service exchange
Product/service exchange
  • (micro-)payment
  • (intangible) product
  • logistics of products and services
  • subscription mechanisms



Public agencies



ec applications
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
Examples of EC (B-C)
  • Retail
    • Internet bookshop
    • CDNow
    • Shopping malls
    • Auctions
    • Collective buying
examples of ec b c20
Examples of EC (B-C)
  • Finance
    • ESI (stock market)
    • Electronic banking
examples of ec b b
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
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
Infrastructure for electronic markets
  • Banking facilities
  • Communication
    • confidentiality
    • integrity
    • authentication
    • non-repudiation
  • Transfer and storage of products
  • Advertising
banking facilities
Banking facilities
  • Different payment methods should be supported
  • Payment should be safe
  • Payment and delivery guaranteed
  • 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
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.
  • How is advertisement arranged?
    • Blackboard?
    • Shopping mall?
    • One-on-one advertisement allowed?
  • Format of advertisements?
  • Payed advertisements?
  • Who can advertise?
types of markets
Types of markets
  • Direct transactions
    • shopping mall
    • classified ads
    • direct negotiation
  • Brokered transactions
    • distributors
    • brokers
      • auctions
types of markets ii
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
  • Only “negotiate” about price.
  • Fixed:
    • product specification
    • payment method
    • transport
    • delivery terms
    • etc.
  • Sealed auctions
    • First priced sealed bid
    • Vickrey
    • Sealed double auction
  • Open auctions
    • Dutch auction
    • English auction
first price sealed bid
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
  • 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
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
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
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
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
Other issues on auctions
  • Bidder collusion
  • Lying auctioneer
  • Interrelated auctions
examples of 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
Technologies in EC
  • EDI
  • WWW
  • Multimedia
  • Work Flow Management
  • Agents
  • Electronic payment, smart cards, etc.
  • ...
  • 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 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
Agent operated markets
  • http://auction.eecs.umich.edu/
  • http://www.iiia.csic.es/Projects/fishmarket/
  • Stock market
  • Power trade
agents for negotiation
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 negotiation48
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

item watching with agents
Item watching with agents
  • Agent watches auctions in which you are interested
  • Agent warns when your bid is overturned
  • Agent warns when it gets interesting to start bidding
  • Agent bid (strategically) up till a predefined level
  • EC contains many, different aspects
  • EC is per definition multi-disciplinary
  • Agents can support in information seeking phase (now already)
  • Agents play a role in transactions when these are well defined and the need for speed or monitoring is high
  • Als ik mijn auto wil verkopen, kan ik hem dan beter op een Engelse veiling (boden lopen op) of een Nederlandse veiling (veilingmeester laat prijs dalen) aanbieden? Geef aan waarom.
  • Wat zou een agent op een Nederlandse veiling van bv. bloemen kunnen leren, waardoor hij in de loop van een ochtend beter gaat bieden? Welke informatie moet hij hiervoor bijhouden?