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15.564 Information Technology I
15.564 Information Technology15.564 Information Technology
Business Intelligence II
Software Agents
Frictionless commerce???Frictionless commerce???
• Low search costs
• Strong price competition
• Low margins
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15.564 Information Technology I
Frictionless commerce???Frictionless commerce???
• Empirical data suggests that is it still an elusive dream…
– Amazon charges 20-30% higher prices than its online competitors but still manages to maintain a 85% market share
• [Brynjolfsson and Smith 2000]
– “Predictions that lower search costs would increase competition, forcing prices to fall to cost […] have not been realized. Average prices are well above cost and are flat or rising over the sample period.”
• [Clay et. al. 2000]
What is going on???What is going on???
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15.564 Information Technology I
Amount of information is increasingAmount of information is increasing
Getting the right information is dauntingGetting the right information is daunting
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15.564 Information Technology I
Electronic commerce is still primarily aElectronic commerce is still primarily a humanhuman--centered activitycentered activity
Select product
Perform transaction
Receive product
Request service
Inform prospects
Perform transaction
Fulfill order
Provide service
Web
Buyer Seller
Example: Use the Web to organize a tripExample: Use the Web to organize a trip
• Where to go?
• Where to stay?
• How to fly?
• What to see?
• Where to eat?
• Etc. etc. etc.
Wouldn’t you rather use a travel agent???
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15.564 Information Technology I
Enter software agentsEnter software agents
• A software agent is an autonomous (software) actor which can take actions towards its goals
• Software agents can help their human masters find information, make better decisions and obtain better transaction outcomes
What can software agents doWhat can software agents do
• Select one or more actions based on “rules”
• Select actions based on knowledge about their users
• Have dialog/negotiation with other software agents
• Autonomously learn over time
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15.564 Information Technology I
An early example:An early example: Intelligent email filtering agentsIntelligent email filtering agents
Agents in the buy/sell processAgents in the buy/sell process
• What to buy?
– Recommendation agents
• Where to buy?
– Price/merchant comparison agents
• How to buy?
– Automatic negotiation agents
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15.564 Information Technology I
What to buy:What to buy:
Recommendation agentsRecommendation agents
Example: AmazonExample: Amazon
Screenshot of recommendations page from�www.amazon.com:
"Welcome to Recommendations.Here are our recommendations for you."
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15.564 Information Technology I
Collaborative filtering vs. personal agentCollaborative filtering vs. personal agent approachapproach
• Collaborative filtering
– Is based on forming clusters of “similar” customers who visit a given site
– Personalization engine and data are “owned” by retailer/intermediary
• Personal agents
– Learn individual consumer’s preferences by trial and error by observing the consumer’s interactions with all sites
– Are owned by the consumer
How do agents learn?How do agents learn?
• Several approaches
– Adaptive neural networks – Reinforcement learning – Genetic algorithms
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15.564 Information Technology I
Adaptive Neural Networks Adaptive Neural Networks
Inputs:
• Product attributes
Output:
• Probability of purchase
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2
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5
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Inputs
Hidden Layer
Output
w13
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Adaptive Neural Networks Adaptive Neural Networks
• Start with rough guess
• Each time, observe consumer’s response and use transaction as the next “training” example
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Inputs
Hidden Layer
Output
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Environm
ent
15.564 Information Technology I
Reinforcement learningReinforcement learning
State Recognizer
Action Selector
LookUp
Table
W ( S, a )
Learner
Agent Input
Action
Reward
Environm
ent
E
Genetic Algorithm Case Study:Genetic Algorithm Case Study:
AmaltheaAmalthea:: A Personalized Information Discovery AgentA Personalized Information Discovery Agent
EcosystemEcosystem
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15.564 Information Technology I
(Screenshot of Amalthea: A Personalized Information Discovery Agent Ecosystem.)
AmaltheaAmalthea architecturearchitecture
Source: Moukas, Alexandros. Amalthaea: Information Discovery and Filtering Using a Multiagent Evolving Ecosystem. Proceedings of the Conference on Practical Application of Intelligent Agents & Multi-Agent Technology, London, 1996.
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15.564 Information Technology I
Genetic algorithm exampleGenetic algorithm example
• http://ai.bpa.arizona.edu/~mramsey/ga.html
AmaltheaAmalthea functionalityfunctionality
• Amalthea creates an ecosystem of agents, which search the web for “interesting” sites
• Each agent searches for sites which contain a given set of keywords
• Amalthea users rate the returned documents
• Based on user ratings, agents evolve
– “Worthless” agents get killed – “Useful” agents are allowed to “mate” (I.e. combine the
keywords they are looking for) and form the next generation
• Over time, this evolution process results in increasingly good fit with the user’s interests
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15.564 Information Technology I
AmaltheaAmalthea genetic evolutiongenetic evolutionInformation Discovery Agents
Information Filtering Agents
AmaltheaAmalthea performanceperformance
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Source: Moukas, Alexandros. Amalthaea: Information Discovery and Filtering Using a Multiagent Evolving Ecosystem. Proceedings of the Conference on Practical Application of Intelligent Agents & Multi-Agent Technology, London, 1996.
Source: Moukas, Alexandros. Amalthaea: Information Discovery and Filtering Using a Multiagent Evolving Ecosystem. Proceedings of the Conference on Practical Application of Intelligent Agents & Multi-Agent Technology, London, 1996.
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15.564 Information Technology I
Benefits for customersBenefits for customers
• Reduce search time/effort
• Make better recommendations
• Improve over time
• Tailored content and advertising
• One-to-one marketing
• Etc …
Benefits for providersBenefits for providers
• Higher customer satisfaction
• Higher loyalty
– … because benefits increase over time
• Accumulate useful data for “market research”
– … but must be very careful with privacy laws!!!
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15.564 Information Technology I
Where to buy:Where to buy:
Price comparison “Price comparison “shopbotsshopbots””
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Screenshot of search for Guinness World Records2000 book at price comparison "shopbot" and theresults from different online vendors.
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15.564 Information Technology I
Limitations of currentLimitations of current shopbotsshopbots
• Do not necessarily display the information the consumer really cares about
• Do not capture the consumer’s relative weighing of price/quality attributes
• Do not capture information from consumers past experiences
• … No wonder they are not very successful (less than 5% of Internet users use shopbots)
Opportunities for software agentsOpportunities for software agents
• Personalized shopbots who adaptively infer individual consumers utility function
– What factors matter most – Relative weighing of factors
• Similar in spirit to recommendation agents
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15.564 Information Technology I
Implications of “Implications of “shopbotsshopbots””
• Benefits for customers
– Better prices, service terms
• Challenge for vendors
– … but also helps vendors learn more about their competitors – Most vendors have responded with complex, rapidly
changing price structures
• Business opportunity for the mediating entity (the agent “operator”)
– E.g. frictionless commerce. Com
How to buy:How to buy:
Negotiation agentsNegotiation agents
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15.564 Information Technology I
Intelligent Negotiating AgentsIntelligent Negotiating Agents
User needs,
criteria &
preferences
Business sale
&
pricing rules
BUYER Buy Agent Sell Agent SELLER
Negotiation about transaction
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Screenshot of Kasbah projectby Keith D. Smith, Robert H. Guttman, Pattie Maes, Alexandros G. Moukas, andGiorgos Zacharia
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15.564 Information Technology I
How do agents negotiate?How do agents negotiate?
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Screenshot of Kasbah projectby Keith D. Smith, Robert H. Guttman, Pattie Maes, Alexandros G. Moukas, andGiorgos Zacharia
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15.564 Information Technology I
Implications of negotiating agentsImplications of negotiating agents
• Dynamic pricing becomes a reality
– Everything is on auction
• New, complex categories of auctions that were not practical before become possible
– Combinatorial auctions where multiple “bundles” of goods are auctioned simultaneously
– E.g. complete travel packages including airfares, hotels, tours, etc.
ChallengesChallenges
• Standardizing the meaning of information
• Trust building
• Dispute resolution
• Security
• …
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15.564 Information Technology I
When will all this happen???When will all this happen???
• Historically, there has been a time-lag of about 15 years between the time that a major new technology has been proposed in the lab and the time it entered the mainstream of business
• Agents were proposed in the late 80’s-early 90’s
• Therefore, they are about to enter the mainstream by 2005!!!
• (Historically, technological predictions involving time have been most unreliable)
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