Electronic Negotiation and Mediation Support

Technische Universität Wien - SS 2011

Electronic Negotiation
and Mediation Support
General Management (330.117)
Matteo Michele Damiani (1029296)

Electronic Negotiation and Mediation Support 2011

Abstract

In the first part this paper provides an insight into the different forms of negotiation and
mediation support that have been developed to help users to automate negotiation
processes which involve complex problems.

Several definitions and classifications will be presented with the aim to clarify the
differences in model and configuration of various systems interacting with human
negotiators.

Then different NSSs and ENSs will be compared with a historical overview of the most
significant experiments that are described in the literature, including research results and
research frameworks.

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1. Introduction

What is Electronic Business? Usually referred as e-Business, it can be defined as the
application of information and communication technologies (ICT) in support of all the
activities of business [1].

Electronic commerce can be seen as one of the essential activities of e-Business and
consists in the process of buying, transferring, or exchanging products, services, and/or
information via computer networks, including the internet [2]. All these activities can be
named also as Negotiation.

Negotiation between enterprises is referred to business-to-business or B2B and includes
the processing of the electronic order, the cooperation between partners and the
facilitation in the exchanging data between companies.

Electronic negotiation that is conducted between businesses and consumers is called B2C
and is related with the selling to the mass market and the handling of customer service.

Electronic business systems are more relevant in B2B transactions because they should not
only supply an easy-to-use order interface, but they should help to establish complex
transactions where users need to negotiate [3]. For this reason in this paper I will discuss
topics related to systems which support B2B negotiation.

The concepts just explained were important for the description of the environment in
which Negotiation and Mediation Support Systems take place.

The essay is structured as follows: In the next chapter I will present the different forms of
negotiation and mediation systems, presenting also the different classifications of the
systems. Chapter 3 will present several empirical studies which have compared different
kinds of Negotiation Support Systems to understand the advantages and disadvantages.
Chapter 4 has the same structure of its previous chapter but it is focused on the
Negotiation Support Systems that are used on the web called Electronic Negotiation
Systems. In chapter 5 two assessment models of NSS and ENS are presented.
Finally in chapter 6 I will discuss what I have called the open issues.

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2. Different forms of Negotiation and Mediation Support

2.1. Overview of the Support Systems

In the literature there are several example of classification of systems that support
negotiations. My first concern is to present the principal definitions and ideas that experts
have reached during the years and providing the state of the art situation.

The roots of the software that helps the negotiations are the Decision Support Systems
(DSS). The definition and scope of DSS has been migrating over the years [4]:
In the 1970s Sol described DSS as "a computer based system to aid decision making".
Late 1970s the DSS movement started focusing on "interactive computer-based systems
which help decision makers to utilize data bases and models to solve ill-structured
problems”.
In the 1980s DSS provided systems that used “suitable and available technology to improve
effectiveness of managerial and professional activities";
At the end of the 1980s, DSS faced a new challenge towards the design of intelligent
workstations.

A Negotiation Support System (NSS) is a DSS that in addition facilities communication [5],
coordination [6] between negotiators and above all it supports the negotiation process
with more help and facilities.
NNSs are designed to assist negotiators in reaching mutually satisfactory decisions by
providing a means of communication and through the analysis of available information.
Negotiation support may involve using a model-driven, data-driven, communications-
driven, document-driven or a knowledge-driven DSS. This sub-category of computerized
decision support systems is defined by the purpose of the system [7].

An Electronic Negotiation Systems (ENS) is Internet-based system which is network-centric
and relies on ever-present Internet connectivity. It allows tight integration of internal and
external enterprise business processes (e.g. value chain and supply chain management
systems) and a large number of people accessing systems from anyplace.
Its user interface is provided by the web browsers; it is easy to understand and common to
many different applications. Internet popularity stimulated the development of these
technologies, including software agents and search engines [8].

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Therefore an e-Negotiation System (ENS), according to Kersten’s definition: “is software
that employs Internet technologies, is deployed on the web, and has one or more of the
following capabilities” *9+:
1. Supports decision- and concession-making;
2. Suggests offers and agreements;
3. Assesses and criticizes offers and counteroffers;
4. Structures and organizes the process;
5. Provides information and expertise;
6. Facilitates and organizes communication;
7. Aids agreement preparation;
8. Provides access to negotiation knowledge; experts, mediators or facilitators.

There are also ENSs software that do not use NSSs; in this category we find e-mail, chat
and streaming video [10].

An e-Negotiation Table (ENT) is software that provides a virtual meeting workbench
(bargaining table) where the negotiators can make offers and post messages [11] (e.g.
databases, SQL).

A Negotiation Software Agent (NSA) is software that conducts a negotiation in favor of the
interests of his party [12]. NSAs have higher autonomy than NSSs in the decision-making
and communication activities.
In my opinion this systems represent the most important and interesting systems that
support negotiations because they are able to substitute a large part of the duty of the
user. For this reason I will give more attention and details about this topic.

According to Braun et al.: “The NSA acts for and on behalf of the principal, helping him to
seek information, evaluating the principal, and communicates with the counterpart” [13].
The functions of NSAs depend on the principal’s instructions which decide agent’s
autonomy. “The agent may be highly specialized and may co-operate with other
agents, interact directly with the principal, or it may communicate via a DSS or a NSS that
supports the negotiators in the construction of problem representations and in their
assessment and modification” [14].
The main function of the agent could be: present offers, search information about
corresponding negotiation situations, collect information about the counter-parts and
advise the negotiator if pre-defined conditions are broken.

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“The ill-defined and ambiguous issues, decisions regarding relationship between the
parties, modification of the rules and parameters are better left to the principals” *15].

While both an ENS and NSA may try to help the negotiators understand the problem, a
Negotiation Agent Assistant (NAA) is software that provides human negotiators with
intelligent and independent advice [16]. It supplies relevant information about the
counterparts and it differs from a NSS while it helps only one party and not all the
negotiators.

Figure 1 shows the different existing software systems that support negotiators.

[Figure 1]: “Umbrella Picture”: Software Systems Support for Negotiation

After introducing the general view of the Negotiation and e-Negotiation support systems;
it is now important to recap the most important classifications of ENSs that the literature
offers from different point of views.

2.2. Social and socio-technical systems

ENSs can be categorized by the level of their intelligence and autonomy.
The abilities of software can define two types of environment in which they operate [17]:

A negotiation social system uses software as a simple tool to solve conflict. Software
has no capability to start any task without the user’s specification;

A negotiation social-technical system relies on software that, as a complex tool,
actively supports negotiators and helps users to achieve their objectives.

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2.3. Passive, active and proactive system

Another criterion that can be used to categorized systems is their activeness or degree of
intervention [18, 19]:

Passive systems: help dispersed users to interact, communicate, compute formulae
and display data. They do not provide any structure for the negotiation process and
they do not influence the behavior of participants to the negotiation;

Active facilitation-mediation systems: helps users in formulating, evaluating and
solving difficult problems. They assist negotiators structuring the process. Active
systems are able to produce information to users that they did not specify;

Proactive intervention-mediation system: have the same capabilities of the active
systems but they also coordinate negotiators activities, suggesting and critiquing.
Proactive systems intervene without the request of the negotiators.

2.4. Facilitation, mediation and support

The following classification considers the role of software as a third party in the
negotiation process [20]. This differentiation allows us to determine 3 types of
negotiations:

Computer facilitated negotiations: use technologies like email, chat and video-
conferencing to provide the coordination between negotiators. The content of the
communication is not affected. We could say that the software used in this case are
an extension of our physical abilities;

Computer supported negotiations: rely on software that reduces the cognitive
effort of the users by providing them information (e.g. simulations, graphics). These
kinds of software allow negotiators to understand better the problem.

Computer mediated negotiations: use software to facilitate negotiators to reach an
agreement. The potential of the software is to offer a compromise that may lead
towards an agreement. The last two groups of negotiations use software that
extends our mental capabilities.

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2.5. Phases, activities and support

A standard negotiation process may be simply categorized in three principal phases: pre
negotiation, negotiation and post negotiation.
The relevance in term of the amount of activities that the software covers during the
phases of the negotiation process is another criterion that let us distinguish between four
different types of systems [21]:

Planning and preparation systems: help one user to organize the set of alternatives
determining the utility functions. They are used in the pre negotiation phase when
the planning has to be done;

Assessment systems: they evaluate the offers proposed by the counterparts. These
systems can be used during all the negotiation phases;

Intervention systems: designed to support a mediator in activities like agenda
setting, exchanging offers or reaching an agreement;

Process systems: help users in both individual and common activities. They
influence the negotiation dynamics and procedures. They can be used in a single
phase or in the whole process.

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3. Comparison of NSSs

My concern of this chapter is to report the most significant results of empirical studies
conducted with the aim of investigate the effects and efficacy of NSS on the outcomes of
negotiations and on user’s attitudes.

I decided to present in a more detailed way only three experiments (Jones’s, Rangaswamy
and Shell’s, Lim’s) which I think are the most relevant because they gave a great contribute
to the development of the literature in this field.

Anyway for a complete analysis I have also reported afterwards other important
experiments conducted with the same or quite different purposes.

3.1. Jones’s experiment (1988)

Three levels of computer support were compared [22]:

A comprehensive NSS (DSS component and an electronic communication
component);
DSS support only (no electronic communication component);
No computer support.

The results showed that the DSS support was similar to the comprehensive NSS in
improving the information processing aspects of the negotiation such as: joint outcomes,
contract balance, and number of contract proposals.
However, the comprehensive NSS had a wider spectrum of positive effects: impacting the
socio-emotional aspects of the negotiation such as reduced negative climate and increased
users’ satisfaction as well as improving the information processing aspects.

Jones was the first one to consider the degree of conflict over the negotiated issue [23]
and he found that in the low conflict condition, computer suggestions led to higher joint
outcomes, but negotiators took more time. In high conflict situations, negotiators
perceived the climate to be more collaborative with computer support than without [24].

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3.2. Rangaswamy and Shell’s experiment (1997)

The experiments conducted by Rangaswamy and Shell compared four conditions [25]:
No NSS;
E-mail communication only;
DSS-only for preparation;
NSS.

Subjects in the DSS condition used negotiation assistant to quantify their value functions in
the preparation stage of the negotiation, whereas subjects in the NSS condition used the
system also to exchange contract offers and messages with the other party.

The analysis of the experiment focused mainly on joint agreement. According to the
results, dyads in the NSS and DSS condition achieved significantly more integrative
agreement than face-to-face or email dyads.
The negotiation process for NSS users was less friendly because they felt more
competition, but they also realized to be more in control with the process.

Although NSS and DSS dyads obtained similarly highly integrated agreements, NSS led to
the largest joint gains. There was no difference in the agreement obtained by dyads in
email and face-to-face conditions.
The NSS/DSS subjects used twice the preparation time than No NSS or Email users, as they
had to read through the operation instructions.

3.3. Lim’s experiment (2000)

Lim’s experiment *26] confirmed the advantage of the NSS over face-to-face negotiation by
the reduction of cognitive efforts; but he also noticed that computer-facilitated
negotiations, with the only use of communication software, provide lower outcomes than
a face-to-face negotiations. He reputes that the lack of NSS tools which focus the users’ on
the negotiation’s content lead to a premature negotiation conclusion and consequently
low outcomes.

More detailed considerations about the cited studies and other experiments results are
summarized in Table 2.

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[Table 2] – Part 1


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In examining NSS research it becomes clear that existing studies do not provide a full
perspective on NSS impact [27].
For instance, the literature shows inconsistent results on the usefulness of DSS.
In some studies DSS led to improvements in performance, while in others there was no
difference between DSS users and non-users.
One of the problems is that it is virtually impossible to resolve such differences, because
there is usually no basis for comparison of results across studies; in fact only some studies
have similar frameworks but in general they differ.

According to Kersten and Lai the conclusion is that at the moment we cannot be
completely sure when we say that NSS definitely assure positive impact on individual and
joint outcomes [28].

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The reason has to be found in the lack of rigorousness that mark the experiments
considered as a whole. In fact NSS laboratory research exhibits considerable variations that
might also be attributed to differences in [29]:
Experimental design;
Research instruments;
Model/task (e.g., suitability of the NSS for the decision problem);
Interface features (e.g., ease of use of NSS features);
Experimental procedure (e.g., the amount of time allotted);
The outcome measures themselves.

A part of the experts who provided the studies that I have reported here, have proposed
fixed frameworks for empirical research that could allow the comparison of NSS from an
objective point of view.
Denis et al. (1988) proposed a framework focused on the outcomes, Starke and
Rangaswamy (2000) suggested a framework focused on the negotiation process and
Vetschera (2006) proposed a framework that focuses on the usability of a system during
the negotiation.

Figure 2 shows the structure of these frameworks.

[Figure 2] – Key construct in NSS research

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4. Comparison of ENSs

4.1. ENS Samples

The most famous ENSs systems are:

Inspire is a systems based on NSS concept designed in 1995. It provides users with
the following facilities [30]:
 Exchange messages;
 Define discrete stages and activities of the negotiation process;
 Specify preferences and create their utility functions with the conjoint
analysis;
 Evaluate offers;
 Represent the negotiation process by the use of graphics.

The Pictures 3, 4 and 5 show graphically which is the Inspire support process during the
negotiation.

Figure 3

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[Figure 4]

[Figure 5]

Aspire is an integration of Inspire (ENS) with the addition of a NAA [31]. The agent
continuously monitors the negotiation process independently of the user activities,
provides advice regarding the negotiation process and parties’ tactics and strategies
and warns the user about actions that may have negative impact on his situation. It
has been demonstrated [32] that in negotiations supported by a NAA the
percentage of dyads who reach an agreement is higher.

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4.2. Experiments about different ENS

In an experiment by Purdy and Nye (2000) [33] were compared negotiation conducted via
chat, face-to-face, video and telephone. They found that chat users were less cooperative
and more competitive; in addition the time to reach an agreement was more and the joint
outcomes were inferiors. Users were less fulfilled and had a lower desire to have others
negotiations.
The result with the telephone and the video were not so definite because they had conflict
results: sometimes one system was better and other times it was the opposite.
Chat and e-mail did not provide excellent outcomes and the reason could be the fact that
they do not support the negotiation with any decision advice, they just allow the
exchanging of text and messages.

Another negative aspect against the chat negotiation comes from Yuan’s experiment
(2003) [34] that reports how negotiators prefer to communicate with only video or audio
rather than with text alone. The curiosity was that if we add video to a text-audio
communication, the negotiation environment does not seem to improve his quality than
the initial situation.

Weber (2006) experiment [35] was focused on the Inspire system; it considered two
configurations of the system: one with a graphical support, the other one without.
The number of parties that subscribed an agreement was the same for both the two
alternatives. The difference consisted in the number of offers that were proposed: users
that adopted the graphical support needed shorter messages, 334 on average less that the
dyads that did not have the graphical help. The reason is simple: the immediate
information that was not available with the graphs had to be asked to the counterpart.

Köszegi and Vetschera’s studies (2002) [36] focused on the relationship between the
peculiarity of a negotiator, the facilities of the system and the consequently reached
agreements. The experiment was realized with an Inspire system. They discovered that the
way a subject perceives the utility of a system is influenced by different factors:
Habits and culture;
Previous capacity in the use of the system;
Negotiation personal skill of the user.

In addition they noticed that precedent negotiation experiences help the user to feel the
system easy and friendly to use.

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Lai et al. (2006) [37] studied the effects of two different strategies: cooperative and non-
cooperative on the negotiation outcomes.
Cooperative users control the whole process and consider it more easy to accept; the
consequences are that they present less offers but more messages, they provide clearer
information without confusing the counterpart with frequent proposes. Thus, obviously
the percentage of successful agreements was higher for the cooperative negotiators than
for the non-cooperative ones.
Negotiations conducted with e-mail bring to more fair outcomes than face-to-face because
let the user reflect before the answer (asynchronous reflection).
On the other hand they require more time.

Köszegi et al. (2006) in their research [38] compared some of the most important ENSs
studies. The general evidence of the previous studies was that ENSs lead to better joint
outcomes and high solution quality. Furthermore they noticed that precedent studies
discovered how ENS processes require more tactics (more preparation) about the use of
the systems.

Thus their main research purpose was to understand if better preparation (required by the
most complex ENSs) leads to more competitive or more cooperative behavior.
In order to answer to this doubt they compared 2 different ENSs:
- SimpleNS: which barely is a communication platform (the passive system);
- Inspire: which I have described in this paper too (the active facilitative-mediation
system);

The results of the research can be divided in two groups and can be summarized in the
following statements:

 Effect of system on Negotiation behavior:

Surprisingly to the expectation, users of Inspire provided less information; while
SimpleNS users put more effort in the data exchange;
There was no difference in transmitting negative affective behavior between the
two systems. On the other hand users of the active system exhibited a more
positive affective behavior. This relevant point brings to the idea that task
orientation does not counteract obligatory with socio-emotional behavior;
Users of the Inspire systems presented less tactical behavior and they more often
expressed positive emotions;

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Negotiators supported by Inspire with use more logrolling and trade-off, thus they
are able to make more package offers and as a consequence they make more
concessions (with price and quality) compared with the passive systems’ users.

 Effect of Negotiation Behavior on Outcome:

There is no correlation between distributive behavior (persuasive, use of
substantiations, threats or power, single-issue offering) and the reaching of an
agreement;
On the contrary they found a positive correlation integrative behavior (developing
creative solutions, use of logrolling, packages offering) increases the probability of
an agreement.
So with the Inspire system negotiators were able to reach more accords because
they achieved a better relationship.

This research definitely showed that Inspire system support increases effectiveness of
users and in addition it is possible to conclude that “relationship building and expression of
positive emotion is connected to reaching agreements [39]”.

Figure 6 shows the research framework.

[Figure 6]: The Research Framework

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5. NSS & ENS assessment

In this chapter I will discuss two models that can be used to evaluate the
effectiveness of both Negotiation Support Systems and Electronic Negotiation
Support Systems.

5.1. The TAM Model

The Technology acceptance model (TAM) [40] is an assessment model that can be applied
to determine the wishing of a negotiator to use an information system.
According to this model:
The behavioral intention to use the system influence the actual use of the system;
It is enough to expose the user for a short time to make him perceive the usefulness
and the ease of use of the system;
The content of the analysis are specific activities;
The users belong to the same organization, so they have a common origin.

Figure 7 shows the TAM model scheme.

[Figure 7] - The Technology acceptance model (TAM) scheme

5.2. The AMIS model

The assessment model of internet systems (AMIS) [41] is an upgrade of the TAM model.
The model’s purpose is to analyze the web-based system success.
The framework of the AMIS model differs from the TAM model because of the object of
the analysis; In fact, while the TAM model analyzes traditional systems, the AMIS model
focuses on web-based systems that are open to every user at any time.
The basic changes brought by the AMIS model are the following:

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Experienced usefulness of the system substitutes the perceived usefulness of the
system;
It considers the complete problem, not only simple selected tasks;
The exposure of the users can be long;
Web-based systems can be used by multiple users with different backgrounds so
the user population may not be uniform. It is important to consider negotiators’
different individual peculiarities because they affect their experiences and ease of
use with the system;

Figure 8 shows the AMIS model scheme.

[Figure 8] - The assessment model of internet systems (AMIS)

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6. Open Issues

6.1. NSS implementation problem

It is not easy for a person to start using a support system especially if he/she has never
used it. People that usually use e-mail or telephone could be worried to learn a new
system that maybe will change the way they work.

So how is possible to convince an employee that the NSS or maybe a ENS with a NSA/NAA
will help his/her life at the workplace?

There are some reasons that can be listed but essentially the main points are [42]:
Negotiators must be convinced that it is enjoyable to use it;
Negotiators must be sure that its use will improve performances;
Their boss or colleagues think it is worth to use it;
Because of the causal nature of their negotiation tasks.

6.2. The future of the Support Systems

The great future of the NSSs is on the web market. The negotiation between buyers and
sellers on the internet with the use of ENSs has the following advantages:
Ubiquity of the net;
Ease of use interfaces;
Real time negotiation.

In the 1990s some web sites were born to support the commerce on-line.
They allow negotiators to find the best price in order to create a joint agreement (also the
B2C market).

A new business accompanied this trend, the one of the e-commerce website developer.
Consultancies started to establish business units specialized in creating ecommerce
platforms and systems for both retailers (B2C) and brands (B2B).

But ENSs solution moved also in other segments. One example is the success that has
online systems supporting insurance claim negotiations. They help the parties to solve
conflicts in a smarter and faster way with the clear final aim of the joint agreement.

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It is important to consider that the increase in the use of the internet, the explosion
growth of the e-business/e-commerce and the new trend of mobile internet connection
will bring new chance to study the interactions with ENS.
ENSs will contribute to the solution of different types of negotiations, who knows which is
the next improvement?

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Notes:

[1] Wikipedia (2011)
[2] Wikipedia (2011)
[3] Köszegi et al. (2006a)
[4] Henk Sol (1987)
[5] Lim & Benbasat (1992)
[6] Lai (1989); Holsapple, Lai et al. (1995)
[7] Bui & Shakun (2004)
[8] Kersten (2004a)
[9] Kersten (2004b)
[10] Lempereur (2004)
[11] Kersten (2003)
[12] Jennings & Faratin et al. (2001)
[13] Braun et al. (2006a)
[14] Braun et al. (2006b)
[15] Braun et al. (2006c)
[16] Chen & Kersten et al. (2004)
[17] Kersten & Lai (2006a)
[18] Kersten (2004c)
[19] Köszegi et al. (2006b)
[20] Kersten & Lai (2006b)
[21] Davey & Olson (1998)
[22] Jones (1988)
[23] Kersten & Lai (2006c)
[24] John & Yang (2004)
[25] Rangaswamy & Starke (2001a)
[26] Kersten & Lai (2006d)
[27] Rangaswamy & Starke (2001b)
[28] Kersten & Lai (2006e)

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[29] Rangaswamy & Starke (2001c)
[30] Rangaswamy & Starke (2001d)
[31] Al-Sakran & Serguievskaia (2006)
[32] Kersten & Lo (2003)
[33] Purdy & Nye (2000)
[34] Yuan, Rose & Acher (1998)
[35] Weber, Kersten & Hine (2006)
[36] Köszegi , Vetschera and Kersten (2002)
[37] Lai, Doong & Kao (2006)
[38] Köszegi et al. (2006c)
[39] Köszegi et al. (2006d)
[40] Davis (1989)
[41] Vetschera et al. (2003)
[42] Lee et al. (2007)

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References of Figures and Tables:

 *Figure 1+ Kersten, E. Gregory and Lai, H. (2006): “Negotiation Support and E-
Negotiation Systems”, InterNeg Research Papers, p. 5.

 *Figure 2+ Kersten, E. Gregory and Lai, H. (2006): “Negotiation Support and E-
Negotiation Systems”, InterNeg Research Papers, p. 22.

 *Table 2+ (Part 1, 2, 3) Rangaswamy, A. and Starke, K. (2001): “Computer-mediated
Negotiations: Review and Research Opportunities”, Encyclopedia of
Microcomputers, Vol.26, Marcel Inc., NY: New York, pp. 35-37.

 *Figure 3+ Kersten, G. E. and S. J. Noronha (1997): “Supporting International
Negotiation with a WWW-Based System”, Centre for Computer Assisted
Management, Carleton University, p. 6.



 [Figure 6] Köeszegi, S.T., Srnka, K.L. and E. Pesendorfer (2006): “Electronic
Negotiations – A Comparison of Different Support Systems, Die Betriebswirtschaft”
66 (4), pp. 445.

 [Figure 7] C. M. Jackson, S. Chow, and R. A. Leitch (1997): "Toward an
Understanding of the Behavioral Intention to Use an Information System," Decision
Sciences, vol. 28, p. 363.

 *Figure 8+ Vetschera, R., G. E. Kersten and S. Köszegi (2003): “User Assessment of
Internet-Based Negotiation Support Systems: An Exploratory Study”, InterNeg
Research Papers, p. 12.

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