- Social and economic interactions
The new economy is the largest and most complex adaptive system ever
created. It is electronically mediated; people and organizations use
software tools on the Internet to communicate, collaborate, coordinate
and decide. It employs solutions of the old economy, such as local markets,
face-to-face negotiations, physical distribution channels and logistics.
It also introduces new solutions, including e-marketplaces, mass customization,
virtual enterprises, knowledge management and globalization (Bobe 2002).
Models and procedures used to devise and implement these solutions are
embedded in software.
The new economy modifies the existing forms and creates new forms of
coordination and governance. Although Malone et al. predicted in 1987
an overall shift towards market-based coordination, we observe that
markets, hierarchies and networks co-exist as before. However, information
and communication technologies (ICTs) allow redefining and repositioning
these forms. Geographically separated buyers and sellers can access
e-markets which are characterized by increased transparency and low
transaction cost. Inter-organizational virtual networks combine benefits
of the traditional hierarchical, vertically integrated, organizations
with benefits of the competitive power of markets. Large corporations
create vertical e-markets and introduce supply chain management systems
that increase efficiency and reliability, and reduce transaction costs.
Consequently, association in the supply chain implicates an increasing
number of small and medium sized firms.
Supply chain management is an important and complex interaction among
business organizations. In the new economy the focus has shifted from
production efficiency to customer-driven and partnership synchronization
approaches. Implementing this strategic shift requires a high-level
of collaboration among supply chain partners so the optimization is
henceforth made for all activities of the chain.
Within the new economy, several key types of interactions that involve
business, government and other organizations, their employees, customers
and stakeholders take place. E-business allows multiple buyers and
sell-ers representing organizations as well as individuals to enter
electronic institutions and interact with one another, and trade for
goods, resources or services in real-time marketplaces. E-markets
(e.g., electric power, wireless bandwidth, steel, and financial securities)
use electronic auctions and exchanges, and provide new types of trading
support for complex products and services.
ICTs provide similar impetus for the economic transformation as electrification
and mass transportation did earlier. But it is the information and knowledge,
and the software that is used for their processing that make new organizational
forms, collaboration among many people, models of decision-making and
Hardware and traditional communication tools are mostly passive. Software
tools and software-enhanced communication, on the other hand, can
actively and autonomously seek, retrieve, transform, aggregate and
integrate information. Software is increasingly used to manage information
and knowledge, suggest alternatives and make some decisions on behalf
of individuals and organizations.
This proposal is about a multidisciplinary research on the social and
economic interactions in which ICTs play an increasingly important role,
and on the interrelationships between these interactions and the design
and use of ICTs. Five observations about the role of ICTs in the new
economy underlie this project:
Negotiations are the centrepiece of the proposed
research program. They range from haggling over price, bidding and
on-line auctions to setting up a joint venture, creating e-market,
deciding on trade policy and accrediting a virtual university. The
term negotiation used here encompasses communication, cooperation
and information processing, and pertains to decision-making by two
or more participants. It is a process of discovery that leads to the
reorganization and adjustment of understanding, expectations and behaviour.
It is a social process; its activities and outcomes depend on the
participants, their individual characteristics, culture and profession.
The participants are interdependent; to agree on a joint decision
they have to communicate and coordinate their activities.
- Software and electronic media provide the
platform through which transactions and activities are conducted,
- Software allows for implementation and enhancements
of mathematical and behavioural models and practical solutions,
- ICTs enable new modes and forms of communication,
collaboration and problem solving,
- System design determines problem solving strategies
and vice versa, which implies that software design imposes boundaries
on available alternatives and achieved compromises, and
- Social processes which are mediated, supported
and partially automated with software require integration of social
science, science and engineering.
- E-negotiations: participants, models
Communication is an important feature of the Internet. No less important
is the ability to access various sources of information and expertise,
and use both local and remote systems to obtain support and advice.
It is the synergy among (1) communication, (2) access to information,
and (3) support for problem solving that provides the basis for informed
interaction, cooperation, and participation. These three processes are
key to many activities in both the traditional and the new economy,
and in both the traditional and the electronically mediated government.
They modify the ways some negotiations are conducted and make negotiations
involving people from al-most anywhere possible. In that, ICTs allow
for e-negotiations, i.e., processes supported, mediated, and conducted
through an increasingly vast array of software systems and electronic
Business organizations are interested in various e-negotiation solutions,
including efficient on-line bidding and auctioning, purchasing and trading.
Governments and not-for-profit organizations are interested in providing
people with electronic agora equipped with systems supporting discussion,
participation, cooperation, and conflict management. This stimulates
research on e-negotiation processes and systems.
Even though e-negotiations will not replace all traditional negotiations,
information and software are necessary for collaboration and communication
in both virtual and physical spaces. ICTs thus impact almost all forms
of decision-making and negotiations whether they are face-to-face or
conducted via electronic media. We will investigate the impact ICTs
have on decision-making and negotiation. We will study different forms
of e-negotiations and their applications in conflict management and
e-business transactions. We will also study their effect on commerce,
business, government, teaching and research. To do so we need to consider:
The participants of negotiations are private persons
or representatives of businesses and of other organizations. Social
science studies of negotiations typically consider face-to-face negotiations.
Email negotiation experiments have been studied only recently (Kopelman
et al. 2001; Thompson and Nadler 2002). In most simple negotiations
email or fax may be sufficient but these technologies (in themselves)
cannot help the negotiators to make better decisions. A few studies
of negotiators supported by simple information systems (Kersten et
al. 2002; Köszegi et al. 2002) show the systems’ potential for
the effectiveness and efficiency of negotiations. More advanced and
expressive systems, such as decision and negotiation support systems
(DSS/NSSs), include tools for the analysis of alternatives, construction
of new ones, their evaluation and simulation of their implications (Lim
and Benbasat, 1993). We focus on the use and implications of advanced
systems in e-negotiations.
- The participants and the relationship between
participants and software;
- The role of electronic media, software systems
and models; and
- The traditional and new requirements of the
participants regarding the models and software.
The participants of negotiations may be not only people but also systems
called software agents (Jennings and Wooldridge 1998). Definitions
provided in the negotiation literature, do not exclude processes in
which people interact with software agents that capable of following
strategies and making decisions independently. These software agents
can act as advisors, facilitators and also negotiators that represent
individuals and organizations. Research on their collaboration with
people, division of responsibilities and human-machine negotiations
is relevant to knowledge- and technology-intensive socioeconomic systems.
Communication technologies, including media-rich email, provide infrastructure
that is becoming available to very many people and organizations. They
allow for fast transactions and interactions, exchange of messages,
and documents but they do not facilitate collaboration, nor do they
help to understand and solve complex problems, or provide information
that people seek. This can be done only with software technologies,
including, DSS/NSSs, which support people, and software agents that
take over some responsibilities from people. These systems can achieve
this because of the knowledge that is embedded in them. This knowledge
is represented with rules, procedures and models that have been constructed
in social sciences, humanities, operation research, and information
systems. DSS/NSSs are part of the superstructure that supports accessing
information, making sense of available information, and making well
informed and justified suggestions.
The distinct characteristics of the new economy markets (e.g., virtuality,
higher transparency, lower transaction cost and reduced cycle time)
have several consequences for cooperation and negotiations. Product
differentiation, price discrimination and buyer accumulation strategies
have resulted in more negotiations taking place in electronic rather
than traditional markets. The number and the diversity of partners involved
in e-negotiations are greater. The Internet empowers consumers, companies
and governments to implement all kinds of innovative approaches and
to seek information prior to entering negotiations and making decisions.
This imposes strong requirements on the design of the NSS and agents
because in the new economy people and organizations want and should
participate in processes that involve negotiations.
In the past, systems were used to solve difficult computational problems.
With people entering negotiations across borders, systems that can,
for example, recognize and address cultural differences are needed.
This requires integration of mathematical models with models and prescriptions
proposed in social sciences. It also requires that the system designers
recognize that people differ not only in the language and symbols they
use but also in the way they perceive and structure a problem, communicate
Following these observations we argue that:
Electronic media which transport information are
now commonly used by people and organizations. We distinguish between
media that can be used for e-negotiations and e-negotiation systems
(ENSs). ENSs use electronic media to establish communication but they
also have components to support decision-making and negotiations, access
databases, knowledge bases and document repositories, and manage information
and communication (Jarke and Jelassi 1986; Ströbel 2002; Vahidov
and Kersten 2002). They include Web-enabled NSS, on-line auction systems,
on-line bidding, electronic bargaining tables, on-line mediation and
other on-line systems that can be used for negotiation, conflict management,
- In the changing world it has become obvious
that we need to find better ways to help people collaborate and
jointly solve problems;
- We know little on how the new economy and
Internet technologies improve or impair communication and collaboration;
- We know even less on how to design better
systems to support and automate various decision-making and negotiation
ENSs can inform people about negotiation opportunities
(e.g., find potential buyers and sellers), provide access to domain-specific
systems (e.g., inventory management, water management, urban planning),
and take over well-structured tasks where a formal representation
of the problem is possible allowing people to focus on ill-defined
decisions, which lack formal representations or solution approaches.
They can be used to mediate collaborative activities in supply
chain management ranging from information sharing, cooperation,
dynamic chain con-figuration, and resource allocation. Depending
on the degree of commitment for different types of these strategic
alliances different types of coordination and negotiation are required.
New ways must be found to support virtual networks or strategic
alliances with innovative (electronic market) and electronic negotiation-based
approaches. E-commerce allows for personalization and mass customization.
Consumers can request the tailoring of products to their particular
needs and suppliers can obtain these requests. The often multi-criteria
nature of purchasing requires simple ENSs to support individual
trade-offs and logrolling. The existing methods for soliciting
individual trade-offs are either too complex to be practically
implemented in such ENSs or are too simplistic to reveal the true
preference of purchasers. New practical and scientifically rigorous
methods for soliciting trade-offs among attributes should be developed
to model purchasers preferences and employ them in these ENSs.
- E-negotiation dimensions
In today's electronic markets, single-attribute negotiation scenarios
dominate. They are 'dynamic pricing’ solutions in which prices
change either over time, across buyers/sellers, or across product/service
bundles. Their main limitation is the imposition of a distributive
process and an ability to consider only simple conflicts.
Several ENSs supporting multi-attribute negotiations with rules enforcing
permissible interactions have been proposed and implemented primarily
for purchasing and sales. Current solutions focus on communication and
document management. They cannot be adapted to users’ needs
and limitations, are often biased towards one side, and do not provide
task-oriented and strategic-level support. They are oriented towards:
(1) providing access to a large number of potential partners; and (2)
increasing the process efficiency in well-defined domains.
Difficult, multidimensional situations, e.g., differentiated markets
with complex products and services, environmental conflicts or planning
problems require processes that allow for multi-criteria and multi-attribute
negotiations and for opportunities to achieve integrative agreements.
Electronic media (e.g. email and video-conferencing), used in a similar
manner as mail, fax or face-to-face negotiations, cannot provide the
required level of support. ENSs which utilize models based on decision
and negotiation analysis, principled negotiations, and prescriptions
formulated by psychologists and sociologists can help to understand
the problem, manage the conflict, and achieve an efficient compromise.
Negotiated decisions may be difficult, initially ill-defined, requiring
discussion about constraints and criteria. DSS/NSS have been developed
with the purpose of facilitating problem structuring, generation of
alternatives, and their evaluation. These systems may be adapted and
deployed on the Web to provide services for negotiating over specific
problems. ENSs for specific highly-complex problems (e.g. air pollution
IIASA TAP), and for general well-defined problems for which users formulate
criteria and evaluate alternatives are becoming now available.
An important dimension of e-negotiation pertains to the exchange of
messages and arguments. Face-to-face negotiations allow personal contact
between negotiators that is often considered helpful or even instrumental
for the successful outcome. Such contact may not be possible in e-negotiations.
A negotiation problem may be reduced to the exchange of formalized
offers, for example, collections of numeric values that characterize
negotiation issues. If, however, such a reduction is not possible and
personal contact is required, the only mode available to negotiators
is natural language. In case of international negotiations this is
frequently English. The often inevitable lack of fluency may make presentation
of offers and concessions difficult, and may force the parties to accept
non-optimal solutions just to cut the awkward verbal exchange short.
This discussion shows the importance of negotiations and e-negotiations
on the one hand and the need for research that spans social sciences,
humanities, science and engineering on the other. We need new types
of socio-technical systems that are developed within a globalized framework
in which multilateral institutions exert strong and democratic power.
In order to cooperate and manage conflicts which are increasingly complex
and difficult, people and organizations must be able to use tools that
can help them and support their actions. These tools, including ENSs,
have to be engineered. At the same time, because these tools are used
in social processes, people and organizations have to incorporate the
results of the social sciences and humanities relevant to the participation
in, and coordination and management of, these processes. The practical
relevance of the negotiation and e-negotiation research for business,
management and administration, and its interdisciplinary dimensions
can be summarized in the following points:
- A significant part of the inter-institutional
communication pertains to negotiations; international trade and
globalization add to the complexity of problems that require involvement
of multiple agents and hence the importance of negotiation processes
and effective negotiation mechanisms.
- Different types of on-line auction and bidding
mechanisms are used for efficient allocation of resources, dynamic
pricing, and brokerage.
- E-markets and supply chain management systems
utilize a variety of e-negotiation protocols and systems.
- Negotiation is an important aspect of intra-organizational
communication; in particular in large and distributed organizations.
- Resolution of social problems, e.g., city
planning and environmental, should not be made without direct participation
of all stakeholders. Collaboration and negotiation support technologies
allow direct participation of stakeholders in the formulation of
policy/decision alternatives and criteria, and in their assessment.
- In the past, experts conducted negotiations
in large organizations. ICTs allow for almost every organization
and individual to engage in interactions that may require negotiations.
- Globalization and wider impact of local decisions
often require involvement of remote organizations in local decisions.
- ICTs, especially software technologies, play
an increasingly important role in all forms of communication and
cooperation, providing support to decision makers and other participants
of decision processes, and organizing and managing data, information
- Cooperation and negotiation involve agents
who are located almost everywhere, have different norms and values,
cultural and professional backgrounds, and needs and objectives.
Software technology, including knowledge-based systems, may play
an important role in mediating and supporting such negotiations.
The aim of the programme is to establish a research centre and provide
an institutional framework for an international network of researchers
and practitioners involved in interdisciplinary research of negotiations
con-ducted in various organizational settings and using various technologies.
The specific objectives of the programme are:
- Formulate methodological foundations for negotiations
conducted in information intensive environment and for the design
and implementation of ENS.
- Conduct empirical and theoretical studies
of the use of software in negotiations and e-negotiations in commercial
and non-commercial activities.
- Undertake comparative studies of negotiations
including face-to-face, conducted via digital media and software
- Determine the impact of e-negotiation models
and protocols on the efficiency and effectiveness of electronic
markets and virtual organizations.
- Assess the use of e-negotiations systems in
different organizational and cultural settings both intra- and inter-nationally.
- Study the implications of negotiation support
systems and software agents for the citizens’ participation
in local and federal institutions.
- Formulate behavioural models of the impact
of cultural, group and organizational values and identities on the
direct and indirect results of e-negotiations.
- Study the potential of the use of negotiation
software agents to represent and learn negotiators’ preferences
and strategies, provide negotiators with advice, and negotiate autonomously
with people and other software agents.
- Study the impact of cultural influences,
values and biases of both system users and developers, on the
structure and process of e-negotiations and support systems in
an international context.
- Study the effect of English as the de facto
standard means of communication between speakers of different languages.
- Determine how knowledge gained in e-negotiations
can be captured, represented and used in other decision-making and
- Study the design and use of e-markets and
e-negotiations systems in experimental research and in teaching.
January 13, 2004