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eCommerce Technology 20-751 Agents and Auctions. What is an Agent?. In real life, a person who acts on your behalf In eCommerce, a computer program that acts on your behalf Agents often perform tasks usually associated with humans - PowerPoint PPT Presentation
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20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
eCommerce Technology20-751
Agents and Auctions
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
What is an Agent?
• In real life, a person who acts on your behalf• In eCommerce, a computer program that acts on
your behalf• Agents often perform tasks usually associated with
humans• But: an agent is just a computer program with certain
properties• Synonyms:
– bot– daemon (a supernatural being of Greek mythology
intermediate between gods and men)
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Agent Properties
• Autonomous– Acts by itself (independent of user)
• Reactive– Responds to its environment, initiates actions
• Communicative– Communicates with people and other agents
• Goal-driven– Acts until it accomplishes its purpose or learns that it can’t
Intelligent Agents: Key Features
Proactive
Don’t constantly need instructions
Able to work unaided
Learn
Improve theiractions with experience
Adapt to userrequirements
Cooperate
Share information with each other.
Able to agree on subtasks
E-commerce/E-businessAgents
InformationManagementAgents
Really smartAgents
“Hidden” Agents
SOURCE: BEN AZVINE
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Examples of Agents
• Search agents– Find web pages. FastSearch, Google
• Metacrawlers– Search multiple indexes. Dogpile, MetaCrawler
• News agents– Locate relevant news stories. TotalNEWS
• Monitors, update agents– Notify user when events occur, e.g. page is modified
ChangeDetection, CyberAlert (company news), Enfish tracker (tracks email, web pages, files) MorningPaper
• Instruction agents– How to do things. eHow (repair a roof)
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Information Agents
• Addresses, phone numbers, reverse directories
– AT&T AnyWho, BigYellow, InfoSpace (by address!)
• Stock bots (financial information, charts, news)– StockPoint, Silicon Investor, biz.yahoo, 1jump
• Filtering agents– Remove unwanted data not fitting profile
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Shopping Agents
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Shopping Agents
• Price bots– BestBookBuys, BottomDollar, Point&Shop, PillBot
(medication)• Sale locators
– ShoppingList.com (brick & mortar), ValueFind• Auction notification
– BidFind• Recommenders
– ActiveSalesAssistant
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Travel Agents
• Information about flights, trains, purchase tickets– USAirways, Orbitz
• Discount Hotels– hoteldiscount!com
• Airplanes in flight– FlightView, FlyteComm, DFW– Chicago tower
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Examples of Agents• Negotiation agents• Agent Builder Tools• CMU Bot List• CMU Agent Page
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Avatars
• A simulated human being• From Sanskrit: “Earthly incarnation of a Hindu god or
goddess”
• Verbot
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Agent Technologies
• Table-driven (data lookup)• Rule-based• Goal-directed• Utility-based
inputs
“ ”
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Rule-Based Agents
Condition-action rule:
if car-in-front-is-braking then start-braking SOURCE: ANDREAS GEYER-SCHULZ
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Business Rules
• Grocery store exampleIF inBasket(french_fries) AND NOT asked(ketchup)
THEN ask(ketchup); ask “Would you care for ketchup to go; with your french fries?”
• Rules that learnIF inBasket(french_fries)
THEN prob(want_ketchup) = SQL( <sql_query> )
; query might involve customer data and ; demographics
IF prob(want_ketchup) > 0.3 AND NOT asked(ketchup)THEN ask(ketchup)
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Fuzzy Logic
Traditional set theory:
• Set membership. If bi = 1 then ei T else ei T
• S = { a, b, c, d, e, f, g } b = 0, 0, 1, 1, 0, 1, 1 then T = { c, d, f, g } b is the membership
function
Fuzzy set theory• The membership function can be any value in [0, 1]• Often interpreted as a probability• S = { a, b, c, d, e, f, g } b = ½, 0, 1, ¾, 0, 1, ¼• Now what is T? (g is 25% in T, 75% not in T)
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Fuzzy Logic
• IF temperature IS hot AND humidity IS stickyTHEN air_conditioning = high
• What is hot? Is 60° hot? 70°? 80°? 90°?– 60° is definitely not hot; 90° is definitely hot; everything else
is “in between” hot(60) = 0; hot(90) = 1; hot(75) = 0.4 etc.
• What is sticky”?80%, 90%, 100%?
• Fuzzy logic hasfuzzy inferencerules, e. g.A B = A*B
-0.2
0
0.2
0.4
0.6
0.8
1
1.2
0 20 40 60 80 100 120
HOT
COLD
TEMPERATURE, °F
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Goal-Directed Agents
Actions are evaluatedwith respect to goals
Will this action get me closer to the goal state?
SOURCE: ANDREAS GEYER-SCHULZ
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Static versus Mobile Agents
Static AgentSystem
Mobile Agent System
SOURCE: MITSUBISHI
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Contract Formation
ExecutionFramework
BusinessLogic
Formation
Fulfilment
ExecutionFramework
BusinessLogic
Formation
Fulfilment
Buyer Seller
ContractContract
SOURCE: CHRIS PREIST, HP
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Event Scheduling
ExecutionFramework
BusinessLogic
Formation
Fulfilment
ExecutionFramework
BusinessLogic
Formation
Fulfilment
Buyer Seller
contract and scheduleexecution
SOURCE: CHRIS PREIST, HP
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Obligation Pending
ExecutionFramework
BusinessLogic
Formation
Fulfilment
ExecutionFramework
BusinessLogic
Formation
Fulfilment
Buyer Seller
An obligation is pending.Fulfilment is triggered.
SOURCE: CHRIS PREIST, HP
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Invoke Processes
ExecutionFramework
BusinessLogic
Formation
Fulfilment
ExecutionFramework
BusinessLogic
Formation
Fulfilment
Buyer Seller
Processes to fulfill theobligation are retrievedand invoked
SOURCE: CHRIS PREIST, HP
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Execute Processes
ExecutionFramework
BusinessLogic
Formation
Fulfilment
ExecutionFramework
BusinessLogic
Formation
Fulfilment
Buyer Seller
Processes are executed
SOURCE: CHRIS PREIST, HP
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Mark Obligation Fulfilled
ExecutionFramework
BusinessLogic
Formation
Fulfilment
ExecutionFramework
BusinessLogic
Formation
Fulfilment
Buyer Seller
SOURCE: CHRIS PREIST, HP
The obligation is fulfilled
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Signal Fulfilment
ExecutionFramework
BusinessLogic
Formation
Fulfilment
ExecutionFramework
BusinessLogic
Formation
Fulfilment
Buyer Seller
SOURCE: CHRIS PREIST, HP
Notify seller
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Acknowledge Fulfilment
ExecutionFramework
BusinessLogic
Formation
Fulfilment
ExecutionFramework
BusinessLogic
Formation
Fulfilment
Buyer Seller
SOURCE: CHRIS PREIST, HP
Acknowledge fulfilment
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Cooperating Agents
SOURCE: PETER FINGAR
Networks of Agents
Local Objects:• Financial agent• Purchasing agent• Inventory management
agent• Customer Services agent• Other objects
BeverageIntermediate
Agent
3
4
1
2
5
DB2
DB1
SoupIntermediate
Agent
Intermediate Agents: • Interfacing• Networking and searching• Optimal Matching
Gourmet-to-Go
COCA-COLA
CAMPBELL
SOURCE: MOHSEN JAFARI, RUTGERS
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Major Ideas
• Agents are the wave of the future– laziness + information overload = agents
• Agent systems are object-oriented and distributed• Agents are mobile• Agents negotiate with and talk to other agents
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Auctions
• Process for matching buyers and sellers and setting prices. Allows supply and demand to operate
• “a market institution with an explicit set of rules determining resource allocation and prices on the basis of bids from the market participants”-- McAfee & Macmillan (1987)
• A protocol for exchanging bids and determining a winner
• Thousands of different protocols possible, depending on auction rules
• Auctions are complicated
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Auctions
• Foreign exchange ($2T per day)• Securities ($100B per day)• Government debt
– treasury bills > $1T per year, municipal bonds
• Public works (roads, bridges)• Private construction• Frequency spectrum• Oil drilling rights• Fishing quotas• Cars (Japan Aucnet)• Sheep and cattle (Australia)
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Price Discovery
• In a marketplace, how are prices set?• Slow movement toward equilibrium, called tatonnement
(from French tâtonner, “to feel one’s way”)• Exchange of price information in many steps• Why? No one wants to reveal his price at the start
• Could be instantaneous if prices were revealed to a neutral agent
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Valuations
• Private value : value of the good depends only on the bidder’s own preferences– Refrigerator to be used at home
• Common value : bidder’s value of an item determined entirely by independent valuation– Treasury bills
• Correlated value : bidder’s value depends partly on own preferences & partly on others’ values– Manufacturing contract whose tasks can be
subcontracted out– Goods for resale (art purchased by a dealer)
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Auction Rules
• When does the auction start and end?• Who can participate? (public, registered users, trading
partners)• What type of auction?• Is the number of bidders (& Identities) known?• How are bids submitted? (timing, increments) How
many bids?• Can bids be withdrawn?• Who can see the bids? (open, sealed)• How is winner determined? How is price determined?• Payment terms• AUCTION RULES AFFECT THE FINAL PRICE
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
English Auctions
• One item, one seller, multiple bidders• Bidders call out increasing bids• Auction ends when bidding stops• What price will win this auction?
– Private values: $10, $17, $18, $20, $23
• Answer: the smallest bidding increment over the second-highest bid
• NOT the maximum anyone is willing to bid
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Dutch Flower Auction
• Many items, one seller, multiple bidders• Price declines with time according to a clock• First bidder to accept a price wins the auction, buys
the quantity he wants• Auctioneer resets the price clock, restarts• Price tends to go up as supply decreases• Very fast, often used for perishables: flowers, fish
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Dutch Flower Auction Clock
SOURCE: BADM.SC.EDUSIMULATION ONTARIO AUCTION WEBCAM
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Fish Auction
SOURCE: ALLOT.COM
FISHAUCTION
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Single Sealed-Bid Auctions
• One item, one seller, multiple bidders• Bidders each submit ONE bid, which they cannot
withdraw• The highest bid wins• If a bidder values the item at $v, how much should he
bid?
• ANSWER: less than $v, depending on the number of bidders and his estimate of the behavior of other bidders
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Sealed-Bid Second-Price(Vickrey) Auctions
• One item, one seller, multiple bidders• Bidders each submit ONE bid, which they cannot
withdraw• The highest bid wins, but the price paid is the amount
of the second-highest bid• If a bidder values the item at $v, how much should he
bid?
• ANSWER: exactly $v
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Revenue Equivalence Theorem
• William Vickrey (1961)• The following auction rules produce the same
theoretical revenue for the seller if buyers are risk-neutral in a private-value auction:– English– Dutch (one item)– single sealed-bid– second-price sealed-bid (Vickrey)
• Nobel Prize, 1996
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Trading Rules of a Double Auction
BUYERS SELLERS
lowest
highest
Trading price = (buy price + sell price) / 2
Highest buyer matched to the lower seller,
2nd highest buyer is matched to the 2nd lowest seller, etc.
Condition: buy price sell price
54321
5.14.12.82.41.6 PRICE: 3.3
PRICE: 3.2
PRICE: 2.9
SOURCE: JUNLING HU
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
NASDAQ
• National Association of Securities Dealers Automated Quotations
• 61,000 computers• 6500 stocks• Continuous double auctions (CDA)• ARCA Integrated Book
Some Auction Types
Auction
Double-sidedSingle-sided
Sealed-bid Outcry OutcrySealed-bid
Dutch English
First Priceor
Vickrey
Call Market
Des
cend
ing A
scending
CDAClearing House
AsynchronousS
ynch
rono
us
SOURCE: JUNLING HU
CDA = CONTINUOUS DOUBLE AUCTION, E.G. NEW YORK STOCK EXCHANGE
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Type of Auctions % Sites
English 85 eBay, egghead, Auction.co.kr, eSellpia and most auction sites
First Price Sealed Bid 7 The Chicago Wine Company; Timeshare Resale International
Dutch 4 Klik-Klok Department Store; Bookbid
Vickrey 1 Antebellum Covers (www.antebellumcovers.com)
Continuous Double Auction 1 Auction Depot (www.auctiondepot.com)
Sealed Double Auction 1 Fastparts (www.fastparts.com)
eAuction Types Used in Practice
SOURCE: BEAM & SEGEV
AuctionTypes
SOURCE:LAUDON & TRAVER
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Buyer
Seller
register
Pref.
alert search
select
display bid
Registration Pref.&Target
ProductAuctionRules
Short list
auction
target
define
update
register
notifynotify
Setupauction
cancel
update
START
bids
offer
select
END
auction
evaluate
registration Product description& auction setup
bidding Auction close& evaluating bids
Delivery & Payment
SOURCE: JERRY GAO
Online Auction Structure
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
Major Ideas
• Auctions are the most important market mechanism• Primarily an information exchange protocol• Very complicated: small changes to rules cause large
changes in behavior• Agents can be used in auctions
20-751 ECOMMERCE TECHNOLOGY
SUMMER 2003
COPYRIGHT © 2003 MICHAEL I. SHAMOS
QA&