The Criteria for Effective Electronic Negotiation
Systems

Oyindamola Abass

1

and Gheorghita Ghinea

2

1

Brunel University Uxbridge Middlesex UB8 3PH
[e-mail]

2

Brunel University Uxbridge Middlesex UB8 3PH
[e-mail]

1

Introduction

Negotiations continue to play an important part of our lives and in particular
influences can be seen in the growth in electronic commerce through various
auction and online stores. Estimates of up to 7bn were predicted for Christ-
mas 2006, a rise of about 35%-40% on the previous year [1]. This growth can
only enhance the demand for electronic negotiation systems or at least highlight
the lack of commercial e-negotiation systems. Such systems, though available in
mostly academic circles will need to be enhanced before they can replace tradi-
tional face-to-face negotiations. As e-commerce continues to grow, we anticipate
a faster uptake of negotiation systems if their design can mimic traditional sys-
tems. Our work proposes to draw the key attributes that need to be present
for a successful negotiation system by examining the current state of the art in
electronic negotiation frameworks. The rest of this paper is structured as fol-
lows: Section 2 elaborates on the need for electronic negotiation systems, with
Section 3 examining the current literature in negotiation frameworks, whilst
Section 4 presents the attributes which we found required in negotiation frame-
works. Conclusions are drawn in Section 5.

2

Why E-Negotiate?

E-commerce has changed the way businesses are conducted today. Almost ev-
ery medium to large-scale company has some form of web presence either via a
website or an online catalogue. Factors such as lower operating cost, integration
to business cycle and wider market reach with no geographical boundaries have
continued to attract new and existing businesses to e-commerce. Thus, for situ-
ations requiring negotiations, one can expect more negotiations to take place in
electronic rather than in traditional markets. Support for negotiations in elec-
tronic markets is therefore not only a necessity but also a critical success factor
for many ecommerce market ventures. [10]. Today, electronic negotiations are
being applied in various fields including electronic commerce, international re-
lations and arbitration, contract management to name a few. Though the scope

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O. Abass and G. Ghinea

of some of these is limited, the adoption of electronic negotiations into vari-
ous disciplines continues to attract researchers and practitioners from various
disciplines.

3

Frameworks

Electronic negotiation systems like most other systems are built on frameworks.
Most of these frameworks have focused on implementing negotiation systems
whilst neglecting the modeling aspects of negotiations. Hence, unique and pro-
prietary solutions are created repeatedly, with enormous efforts spent on inte-
grating isolated solutions [7]. The development of generic electronic negotiation
frameworks can solve this problem. Frameworks are guiding concepts or tools for
modeling a class of interesting real world cases. They help us to systematically
and comprehensively identify, define, and prioritize the problems in a certain
domain. Various frameworks have been developed to date to support different
negotiation systems. Some of these frameworks are now classified according to
the applications which they support.

3.1

Applications in Auctions

An auction is a market institution with rules for resource allocation and prices
on the basis of bids from the participants. Auctions typically have very small
transaction costs and are used to conduct many transactions among businesses
and between businesses and consumers. Negotiation frameworks to support auc-
tions include those of Bellosta et al. [4] who put forward a multi-criteria model
for electronic auctions. This reference-points based model allows the buyer agent
to control the negotiation process on each attribute of the deal. In other work,
Bichler et al. developed the Multidimensional Auction Platform (MAP) as a set
of software modules for building multidimensional auction markets. MAP is an
extensible object framework, which enables the reuse of the advanced allocation
algorithms as a standard solver component in electronic markets. It provides a
declarative interface and sheds developers from the complexities of a particular
allocation algorithm. [5]

3.2

Applications in Multi-agent Systems

Negotiation software agents carry out negotiation activities on behalf of users.
They have the potential to save the human negotiators time and find better
deals in combinatorial and strategically complex settings. [7] In related work,
Jennings et al. [6]developed a generic framework for classifying and viewing au-
tomated negotiations. They suggest the use of argumentation-based approaches
to allow additional information to be exchanged and make it possible for agents
to handle conflicting information. On the other hand, Abass and Ghinea, pro-
posed SOLACE - a generic framework for multi-issue negotiations, which can
be applied to a variety of negotiation scenarios using software agents., SOLACE

The Criteria for Effective Electronic Negotiation Systems

17

supports hybrid systems in which the negotiation participants can be humans,
agents or a combination of the two. [2]

3.3

Application in Electronic Markets

An electronic markets is a marketplace for negotiating the purchase and sale of
goods using. Compared to traditional markets, electronic markets have funda-
mentally different. Strobel [10], proposed a design and application framework for
electronic negotiations. Based on this framework, organizations creating an elec-
tronic market or sellers intending to offer potential buyers the option to bargain
can generate, in a flexible and efficient way, customized electronic negotiation
systems supporting the roles and protocols designed. Although, this classifica-
tion is not exhaustive it does illustrate the breadth of approaches. In the next
section, we draw out the peculiar features which the authors believe need to be
present to support todays negotiation systems.

4

Criteria for Electronic Negotiation Systems

The need for general negotiation frameworks is a major requirement for todays
electronic negotiation systems. Frameworks serve as a guide to developers of new
systems and provide a basis for evaluation and analysis. Most of the frameworks
in existence today are either too complex - [4]making difficult their implemen-
tation; too technical [12] - thus ignoring important factors such as negotiation
strategies - or just consider solutions to specific problems and thus cannot be
re-used in other areas. From the review of negotiation frameworks we have iden-
tified some characteristics which need to be addressed in the development of an
electronic negotiation system. These characteristics have been put together in a
framework - SOLACE II which is an improvement to the authors previous work
on SOLACE. SOLACE II prescribes the building blocks of negotiation systems
and recognizes key features of multi attributes, flexibility, negotiation strategy,
platform independence, hybrid negotiation, validity and learning. These features
can be applied in electronic auctions systems, multi-agent systems and electronic
markets. These features are now discussed:

4.1

Multi-attribute Negotiation

Multi-attribute negotiation is increasingly becoming more ensconced in todays
negotiation systems. Previously, most systems negotiated only on price, making
them somewhat unrealistic because several other factors come to play in reach-
ing agreements such as trust, security, delivery date, quality and so on. Todays
negotiation systems need to cater for multiple attributes. Negotiators need to
be able to bargain on several issues relevant to the negotiation making them
dynamic. Participants should also be able to introduce new attributes where
necessary.

18

O. Abass and G. Ghinea

4.2

Flexibility

The flexibility of negotiation frameworks can be said to be directly proportional
to its usability, allowing developers to easily incorporate them into their designs.
Frameworks should be flexible, specifying the basic building blocks of the elec-
tronic negotiations - protocols, participants, objects or strategies Irrespective of
the specific objects or fields, the framework should be applicable to a variety
of scenarios ranging from buying and selling in e-commerce to any other auto-
mated negotiation scenario. Strobel in SILKROAD [10] proposed a design and
application framework for electronic negotiations. SILKROAD attempts to pro-
vide a generic framework for negotiation systems. However, implementations of
systems based on this framework are very few as it appears to be too complex
and is not easily adoptable.

4.3

Negotiation Strategy

Negotiation strategies drive the entire negotiation process. The negotiation strat-
egy determines what issues will be negotiated and in what order. Such strategies
could be distributive (win-lose) or integrative (win-win). Some researchers have
argued against incorporating strategies into frameworks saying that negotiation
strategies lead to complete automation of electronic negotiations [8],that the
strategies will either be too simple (easily deciphered) or too complex to be
formalised or that the strategies will not gain the trust of users. However, the
importance of strategies cannot be over-emphasized. Strategies can distinguish
the winners and losers in any scenario.

4.4

Platform Independence

Platform independence should be an essential feature of any framework. As well
as being flexible, frameworks should not be tied to any particular development
environment. For example, Bartolini et al [3]. tied their framework to the Jade
multi-agent platform integrated with the Java Expert System Shell (Jess). Rule
specification in the general negotiation protocol is based on Jess Assertions. This
is not a truly open system and restricts developers to using this platform. Other
frameworks such as SILKROAD or SOLACE on the other hand do not limit
developers to any particular platform for development. The developers are given
a free hand at choosing platforms that are well suited for their development
scenarios.

4.5

Hybrid Negotiation

Despite all advances in automation, negotiation participants still prefer to be
involved in the agreement phase of electronic transactions. In hybrid systems,
structured or formalised tasks are automated, and decision support mechanisms
are used to assess unstructured tasks, whereas humans interactively control the
execution of the negotiation and perform the exception handling. Negotiation
frameworks should therefore provide support for hybrid negotiation systems.

The Criteria for Effective Electronic Negotiation Systems

19

4.6

Time or Validity

Another important factor in negotiations is time - particularly its influence on
the strategies of participants. Negotiations often breakdown if they take too long
as participants may be distracted by changes in the environment or potential
offers from other parties. Time could also influence the strategy of a party. In
a particular negotiation, time could be an important issue if there is a deadline
for reaching an agreement. The result could be a change in the strategy or sub-
optimal agreements could be seen as better than no agreement. Lee [9]proposed
a framework, which emphasizes the time involved in a negotiation process. Lee
proposes that a time attribute be attached to each message to represent the
period in which the message is valid.

4.7

Learning and Adaptation

The negotiation framework should emphasize learning and adaptation in nego-
tiation systems. The negotiators can change tactics during the course of negoti-
ations and possibly introduce new attributes. Learning can also be in the form
of using past experience. Negotiators can use the knowledge gained in previous
negotiations about the participants or scenarios to help in the negotiations. For
example, if the negotiation exists in a dynamic environment and the environment
changes, then the agent has to learn about the changes to be able to carry out its
mission. Wong et al. [12] proposed a framework based on Case-Based Reasoning
(CBR). Case-based reasoning is an approach to use past experience for choosing
concrete strategy in every situation. The framework is built on top of a database
with information on past negotiations. This approach, though very useful, re-
quires a lot of information gathering and may be influenced by some historical
factors present at the time the previous negotiations occurred but which may
have become irrelevant in the present scenario

5

Conclusion

Approaches to electronic negotiation frameworks vary widely across board and
there is no unilaterally accepted framework. The detailed evaluation carried out
highlights the major factors needed for effective negotiation systems. The objec-
tive is to provide future developers of negotiation systems a guide to choosing
appropriate frameworks on which to base their systems. This will reduce devel-
opment time, improve consistency and in time lead to more effective and efficient
systems of higher standards. The authors have incorporated the factors stated
here into the development an electronic negotiation framework SOLACE II. This
is an enhancement of SOLACE [2]. It is currently being used in the develop-
ment of a confidence-based electronic negotiation system which incorporates the
hybrid functionality discussed above. We aim to bring to the fore the need to
have standards in the development of negotiation systems. With the continuous
growth in electronic commerce, standardization of negotiation systems cannot
be ignored for much longer and this provides the thrust of our future research
efforts.

20

O. Abass and G. Ghinea

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