Agent-based Bidding in Electronic Markets - A Prototypical Approach

The overall change in computing from manipulation to delegation was already predicted in the mid-90s but hitherto remains a bold vision. Although software agents have the potential of fully automating processes, real world agent-based applications are very limited in number. Even in the case of electronic markets software agents are rarely employed, albeit they can act as autonomous representatives of human negotiatiors. The prototypical approach presented in this paper seizes the idea of an agent-based electronic marketplace and describes multilateral negotiations as a core of an electronic trading system. Owing to their open format (i.e. open bidding) agent-based multilateral negotiations are expected to reduce transaction costs and to improve the negotiation outcome. The multilateral negotiations are presented in two different environments: in AMTRAS, an agent-based marketplace for bonds, as well as in VTR, a web-based trading system for stocks. Two key features of these negotiations are the revelation of all bids, and the anonymous nature of trading. The information released in the negotiation constitutes the basis for further research such that the agents are capable of deploying own strategies inferred from the other's bidding behavior. The paper concludes with some recommendations as to how automation of the bidding process can be achieveed using software agents' intelligence.