Strategic and Tactical Behaviour in Automated Negotiation

Abstract

Traditional negotiation, conducted face-to-face and via mail or telephone, is often difficult to manage, prone to misunderstanding, and time consuming. Negotiators are typically satisfied with the final outcome and, in many instances, proudly describe it. However, closer inspection usually reveals that money is squandered, resources wasted, and potential joint gain untapped. Automated negotiation promises a higher level of process efficiency, and more importantly, a faster emergence and a higher quality of agreements. The potential monetary impact has led to an increasing demand for systems composed of software agents representing individuals or organizations and capable of reaching efficient agreements (e.g., the industrial trend toward agent-based supply chain management). Work to date on automated negotiation has generated many useful ideas and concepts leading to important theories and systems. Yet, the field is still immature. The design of software agents with negotiation competence largely lacks systematic, traceable, and reproducible approaches, and thus remains more an art than a science. Against this background, this paper presents a model for software agents that handles two-party and multi-issue negotiation, manages important activities that negotiators often perform before starting to negotiate, and formalizes relevant procedures studied in the social sciences and frequently used in real-life negotiation. The model incorporates various strategies and tactics. Strategies are computationally tractable functions that define the tactics to be used both at the beginning and during the course of negotiation. They are based on rules-of-thumbdistilled from behavioral practice in human negotiation. Tactics, in turn, are functions that specify the short-term moves to be made at each point of negotiation. They are structured, directed, and driven by strategic considerations.