Virtual Enterprise Normative Framework within Electronic Institutions Henrique Lopes Cardoso 1,2, Eugénio Oliveira 1 1 LIACC, Faculty of Engineering, University of Porto 2 Polytechnic Institute of Bragança

ESAW'04 2 Outline VO/VE and MAS Electronic Institutions E-contracting and VE contracts Normative Framework VE Contract specification Current work Agent society perspective Open issues

ESAW'04 3 Virtual Organizations/Enterprises VO/VE concept  Applied to many forms of cooperative business relations, like outsourcing, supply chains, or temporary consortiums  Definition “a temporary consortium of autonomous, diverse and possibly geographically dispersed organizations that pool their resources to meet short-term objectives and exploit fast-changing market trends” [Davulcu et al., 1999] Consortium contract [Portuguese legislation]  entities coordinate their efforts towards accomplishing some activity  consortium types: External: new entity represents joint activity to third parties Internal: consortium’s goal does not include supply of goods to third parties (although the members’ goals might)

ESAW'04 4 VE Lifecycle Business definition client need; market opportunity Formation goal definition; selection of participants through negotiation; roles and obligations Operation business developmentRegulation adjustments in consortium structure (exit/entrance of partners) Dissolution goals accomplished; VE no longer justified

ESAW'04 5 MAS and VO/VE Autonomous agents as enterprises:  represent individual interests of an enterprise  negotiate in order to constitute a VO  cooperate by coordinating their activities, fulfilling the VO purpose Normative perspective agents are heterogeneous, independently developed and privately owned  Need for normative systems that enable trust agents follow norms or suffer consequences agents commit to cooperative agreements (business norms regulating the consortium activity)

ESAW'04 6 Electronic Institutions EI as an agent interaction framework  regulations  trustable environment EI regulations  Identity of members registration, digital signatures  Shared ontology specifications domain-independent business terms and domain-specific vocabulary  Business norms applicable to any business engagement  Negotiation protocols for negotiating contract clauses, possibly requiring mediation  Contract specification formal contractual requirements (representation, signatures, …)

ESAW'04 7 Electronic Institutions’ Services Electronic Institution Members Contract registry Ontologies Business norms Transaction repository Contract templates Members’ reputation Negotiation Protocols Negotiation mediation Reputation BrokeringRegistration Contract validation / registration (notary) Contract monitoring and enforcement

ESAW'04 8 E-contracting Definition  a contract is a formalization of the behaviour of a group of agents that jointly agree on a specific business activity E-contracts and norms  contracts form a normative structure  by contracting, agents commit to norms E-contract handling and institutional services  Information discovery (pre-contractual phase) brokering (yellow pages)  Contract negotiation (contractual phase) templates; negotiation mediation; contract validation and registry (notary)  Execution (post-contractual phase) contract monitoring and enforcement; transaction repository; reputation services

ESAW'04 9 E-contract specification Usual approach  Normative concepts (from deontic logic): obligation, permission, prohibition + sanction: making obligations (or prohibitions) effective  Normative statement [Sallé, 2002] ns:    s,b (  <  ) appropriate for simple contracts (e.g. purchase):  ns1: O se,bu (deliver(product, quantity) < date(delivery_date))  ns2: fulfilled(ns1)  O bu,se (pay(price) < date(delivery_date+30))  ns3: not_fulfilled(ns1)  O se,bu (give_discount(-10%, price))  ns4: not_fulfilled(ns2)  O bu,se (pay(+5%, price) < date(delivery_date+60))  What about complex (VE) contracts?

ESAW'04 10 VE Contracts VE business relationship is more complex in nature than a simple sell/purchase operation ongoing (although limited) relationship between partners cyclical interactions deliberate contract termination exit/entrance of partners during the VE lifecycle establishment of contracts with third-parties profit exchange A two-level conception of VE contracts  VE constitution vs. operation Constitutional contract establishes a cooperation agreement Operational contracts implement the intended cooperation

ESAW'04 11 Normative Framework Institutional norms (the law) framework against which a VE contract can be validated Virtual Enterprise constitution (cooperation agreement) platform of cooperation within which operational contracts between VE participants can be checked Operational contract (executable norms) actual exchanges of products/services, which can be monitored Contract validation Contract monitoring / enforcement

ESAW'04 12 VE Contract specification Focusing on the cooperation commitment: VEContract =  Header (H): contract id, normative system, organization participants, resources to be exchanged, signing date, digital signatures H = Partics = {Partic i } Ress = {Res k } Signs = {Sign i }  Cooperation effort (CoopEff): workload acceptance levels and associated prices CoopEff = { } Wload = Freq  {per_day, per_week, per_month, per_year}

ESAW'04 13 VE Contract specification (2)  Business process (BP): flow of resources between participants BP = Request permits (ReqPerm): allowed requests that parties may perform towards their partners ReqPerm = Who, Whom  Partics; What  Ress;  CoopEff Obligation chains (OblChain): implement the business transaction steps composing the required workflow  activated by the enactment of request permits  can be regarded as templates for operational contracts (executable norms) OblChain = OblRule =

ESAW'04 14 Current work Declarative representation for institutional norms VE constitutional and operational contracts  enabling validation of contracts according to the normative framework monitoring and enforcement of operational contracts regulation of the VE lifecycle Integrate institutional services  focus on contract handling contract creation  templates  negotiation mediation  contract validation contract monitoring/enforcement  transaction registration  sanction imposition  reputation mechanisms

ESAW'04 15 Agent society perspective Normative framework for self-interested agents in cooperative scenarios  Agent interaction regulated by institutions EI provides a trustable environment by imposing and enforcing norms  Agent cooperation agreements impose further norms agents voluntarily commit to norms because organized cooperation is in their interest  Agent operational contracts enact cooperation by fulfilling executable norms agents carry out their cooperation agreements

ESAW'04 16 Open issues Relational contracting formal contract: fully specified enforceable contract based on a third party (EI) relational contract: self-enforceable, based on the value of future relationships  (How) can agents learn the level of detail for their contracts according to past experience and agents’ reputations?  (How) can the EI impose certain specifications to non-fulfilling agents? Norm evolution  Can new institutional norms emerge from the continuous operation of the EI?