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
• 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
Stages of Business Transactions
Business Transaction

Stages
Information stage Negotiation stage Fulfillment stage Satisfaction stage
 Support for stages
Business Transaction

Stages
Information stage Negotiation stage Fulfillment stage Satisfaction stage

-Trade relations
- EDI-translators -WWW
Support -Chambers of Trusted Third Parties
for commerce - Standards -e-mail
stages (e.g. EDIFACT,
-product and ANSI X.12)
company data
bases -TradeCard
(e.g. Dun &
Bradstreet) -SET (Secure
electronic trading)
-WWW
 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
Item watching at e-bay now
 Examples of EC (B-C)

• Finance

– ESI (stock market)

– Electronic banking
Publishing
 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:
1. Interactions are fast
2. Interactions are repeated
3. Trade is of relative small value
4. Process is repeated over long periods
5. Products are easy to specify

Examples: stock trade, power trade and telecom

Item watching at e-bay now
 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
 Conclusions
• 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
 Vraag
1. 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.

2. 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?