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  1. 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 negotiations possible.

    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:

    1. Software and electronic media provide the platform through which transactions and activities are conducted,
    2. Software allows for implementation and enhancements of mathematical and behavioural models and practical solutions,
    3. ICTs enable new modes and forms of communication, collaboration and problem solving,
    4. System design determines problem solving strategies and vice versa, which implies that software design imposes boundaries on available alternatives and achieved compromises, and
    5. Social processes which are mediated, supported and partially automated with software require integration of social science, science and engineering.

    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.

  2. E-negotiations: participants, models and systems

    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 media.

    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:

    1. The participants and the relationship between participants and software;
    2. The role of electronic media, software systems and models; and
    3. The traditional and new requirements of the participants regarding the models and software.

    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 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 and negotiate.

    Following these observations we argue that:
    1. In the changing world it has become obvious that we need to find better ways to help people collaborate and jointly solve problems;
    2. We know little on how the new economy and Internet technologies improve or impair communication and collaboration;
    3. We know even less on how to design better systems to support and automate various decision-making and negotiation activities.

    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, mediation, etc.

    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.

  3. 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:

    1. 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.
    2. Different types of on-line auction and bidding mechanisms are used for efficient allocation of resources, dynamic pricing, and brokerage.
    3. E-markets and supply chain management systems utilize a variety of e-negotiation protocols and systems.
    4. Negotiation is an important aspect of intra-organizational communication; in particular in large and distributed organizations.
    5. 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.
    6. 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.
    7. Globalization and wider impact of local decisions often require involvement of remote organizations in local decisions.
    8. 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 and knowledge.
    9. 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.

  4. Objectives

    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:

    1. Formulate methodological foundations for negotiations conducted in information intensive environment and for the design and implementation of ENS.
    2. Conduct empirical and theoretical studies of the use of software in negotiations and e-negotiations in commercial and non-commercial activities.
    3. Undertake comparative studies of negotiations including face-to-face, conducted via digital media and software supported.
    4. Determine the impact of e-negotiation models and protocols on the efficiency and effectiveness of electronic markets and virtual organizations.
    5. Assess the use of e-negotiations systems in different organizational and cultural settings both intra- and inter-nationally.
    6. Study the implications of negotiation support systems and software agents for the citizens’ participation in local and federal institutions.
    7. Formulate behavioural models of the impact of cultural, group and organizational values and identities on the direct and indirect results of e-negotiations.
    8. 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.
    9. 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.
    10. Study the effect of English as the de facto standard means of communication between speakers of different languages.
    11. Determine how knowledge gained in e-negotiations can be captured, represented and used in other decision-making and negotiation processes.
    12. Study the design and use of e-markets and e-negotiations systems in experimental research and in teaching.





January 13, 2004