Virtual Enterprise Normative Framework within Electronic Institutions

1. Virtual Enterprise Normative Framework within Electronic Institutions Henrique Lopes Cardoso1,2, Eugénio Oliveira1 hlc@ipb.pt, eco@fe.up.pt 1 LIACC, Faculty of Engineering, University of Porto 2 Polytechnic Institute of Bragança

2. Outline • VO/VE and MAS • Electronic Institutions • E-contracting and VE contracts • Normative Framework • VE Contract specification • Current work • Agent society perspective • Open issues ESAW'04

3. Virtual Organizations/Enterprises • VO/VE concept • Applied to many forms of cooperative business relations, like outsourcing, supply chains, or temporary consortiums • Definition • “a temporary consortium of autonomous, diverse and possibly geographically dispersed organizations that pool their resources to meet short-term objectives and exploit fast-changing market trends” [Davulcu et al., 1999] • Consortium contract [Portuguese legislation] • entities coordinate their efforts towards accomplishing some activity • consortium types: • External: new entity represents joint activity to third parties • Internal: consortium’s goal does not include supply of goods to third parties (although the members’ goals might) ESAW'04

4. VE Lifecycle Business definition client need; market opportunity Formation goal definition; selection of participants through negotiation; roles and obligations Operation business development Regulation adjustments in consortium structure (exit/entrance of partners) Dissolution goals accomplished; VE no longer justified ESAW'04

5. MAS and VO/VE • Autonomous agents as enterprises: • represent individual interests of an enterprise • negotiate in order to constitute a VO • cooperate by coordinating their activities, fulfilling the VO purpose • Normative perspective • agents are heterogeneous, independently developed and privately owned • Need for normative systems that enable trust • agents follow norms or suffer consequences • agents commit to cooperative agreements (business norms regulating the consortium activity) ESAW'04

6. Electronic Institutions • EI as an agent interaction framework • regulations • trustable environment • EI regulations • Identity of members • registration, digital signatures • Shared ontology specifications • domain-independent business terms and domain-specific vocabulary • Business norms • applicable to any business engagement • Negotiation protocols • for negotiating contract clauses, possibly requiring mediation • Contract specification • formal contractual requirements (representation, signatures, …) ESAW'04

7. Electronic Institution Members Negotiation Protocols Contract templates Ontologies Transaction repository Members’ reputation Business norms Contract registry Registration Brokering Negotiation mediation Contract validation / registration (notary) Contract monitoring and enforcement Reputation Electronic Institutions’ Services ESAW'04

8. E-contracting • Definition • a contract is a formalization of the behaviour of a group of agents that jointly agree on a specific business activity • E-contracts and norms • contracts form a normative structure • by contracting, agents commit to norms • E-contract handling and institutional services • Information discovery (pre-contractual phase) • brokering (yellow pages) • Contract negotiation (contractual phase) • templates; negotiation mediation; contract validation and registry (notary) • Execution (post-contractual phase) • contract monitoring and enforcement; transaction repository; reputation services ESAW'04

9. E-contract specification • Usual approach • Normative concepts (from deontic logic): obligation, permission, prohibition • + sanction: making obligations (or prohibitions) effective • Normative statement [Sallé, 2002] • ns: s,b ( < ) • appropriate for simple contracts (e.g. purchase): • ns1: Ose,bu (deliver(product, quantity) < date(delivery_date)) • ns2: fulfilled(ns1)  Obu,se (pay(price) < date(delivery_date+30)) • ns3: not_fulfilled(ns1)  Ose,bu (give_discount(-10%, price)) • ns4: not_fulfilled(ns2)  Obu,se (pay(+5%, price) < date(delivery_date+60)) • What about complex (VE) contracts? ESAW'04

10. VE Contracts • VE business relationship is more complex in nature than a simple sell/purchase operation • ongoing (although limited) relationship between partners • cyclical interactions • deliberate contract termination • exit/entrance of partners during the VE lifecycle • establishment of contracts with third-parties • profit exchange • A two-level conception of VE contracts • VE constitution vs. operation • Constitutional contract establishes a cooperation agreement • Operational contracts implement the intended cooperation ESAW'04

11. Normative Framework Institutional norms (the law) Virtual Enterprise constitution (cooperation agreement) Contract validation framework against which a VE contract can be validated Contract monitoring / enforcement Operational contract (executable norms) platform of cooperation within which operational contracts between VE participants can be checked actual exchanges of products/services, which can be monitored ESAW'04

12. VE Contract specification • Focusing on the cooperation commitment: VEContract = <H, CoopEff, BP> • Header (H): contract id, normative system, organization participants, resources to be exchanged, signing date, digital signatures H = <Id, NormSys, Partics, Ress, Date, Signs> Partics = {Partici} Ress = {Resk} Signs = {Signi} • Cooperation effort (CoopEff): workload acceptance levels and associated prices CoopEff = {<Partici, Resk, Wload>} Wload = <MinQt, MaxQt, Freq, UnitPr> Freq  {per_day, per_week, per_month, per_year} ESAW'04

13. VE Contract specification (2) • Business process (BP): flow of resources between participants BP = <{ReqPermm}, {OblChainn}> • Request permits (ReqPerm): allowed requests that parties may perform towards their partners ReqPerm = <Who, Whom, What> Who, Whom  Partics; What  Ress; <Whom, What, _>  CoopEff • Obligation chains (OblChain): implement the business transaction steps composing the required workflow • activated by the enactment of request permits • can be regarded as templates for operational contracts (executable norms) OblChain = <OblRule1, OblRule2, …, OblRulep> OblRule = <ActCond, Obl> ESAW'04

14. Current work • Declarative representation for • institutional norms • VE constitutional and operational contracts • enabling • validation of contracts according to the normative framework • monitoring and enforcement of operational contracts • regulation of the VE lifecycle • Integrate institutional services • focus on contract handling • contract creation • templates • negotiation mediation • contract validation • contract monitoring/enforcement • transaction registration • sanction imposition • reputation mechanisms ESAW'04

15. Agent society perspective • Normative framework for self-interested agents in cooperative scenarios • Agent interaction regulated by institutions • EI provides a trustable environment by imposing and enforcing norms • Agent cooperation agreements impose further norms • agents voluntarily commit to norms because organized cooperation is in their interest • Agent operational contracts enact cooperation • by fulfilling executable norms agents carry out their cooperation agreements ESAW'04

16. Open issues • Relational contracting • formal contract: fully specified enforceable contract based on a third party (EI) • relational contract: self-enforceable, based on the value of future relationships • (How) can agents learn the level of detail for their contracts according to past experience and agents’ reputations? • (How) can the EI impose certain specifications to non-fulfilling agents? • Norm evolution • Can new institutional norms emerge from the continuous operation of the EI? ESAW'04