Online Interaction and Transactional Privacy Negotiations:
A Computational Simulation Analysis of an Agent-based System
Danny Fernandes, Ramayya Krishnan, Uday Rajan


     The Internet together with the World Wide Web is an electronic information marketplace. The electronic information marketplace is a rich source of ever increasing personal information about individuals and organizations. The nature of the Internet makes it relatively easy to gather, integrate, and cross reference consumer personal data across different Web data repositories. This relatively easy access to personal information has led to concerns about potential violation of personal informational privacy in the online environment.
     The following observation (Hagel & Rayport, 1997) captures the essence of growing trend in the Web content provider/consumer privacy relationship.

     "But even as more and more managers begin to build strategies based on capturing information about their customers, a major change is under way that may undermine their efforts. We believe that consumers are going to take ownership of information about themselves and demand value in exchange for it. As a result, negotiating with consumers for information will become costly and complex. That process has already begun to unfold, but it could take several years to play out across broad segments of customers and products."

     Consumers on the Web are demanding a greater control over their information, and are willing to disclose personal information in a value exchange relationship (Abela & Sacconaghi, 1997) with Web content providers. Examples of value returned to consumers include customized Web content, guarantees on the privacy of the data they release, or even monetary or other compensation for releasing personal data.
     Negotiation with the consumers in the web environment need neither be costly nor complex for the negotiating parties. Intelligent Web-based software agents (Faratin, Sierra & Jennings, 1998) and Web privacy related protocols (in particular The Platform for Privacy Preferences Project - P3P, of the World Wide Web Consortium) offer opportunities for developing Web-based negotiation agents that act in accordance with privacy preferences as specified by their principals.
     In this paper, we model online privacy bargaining as a bi-lateral, multi-stage, multi-issue game between software agents (browser agents and server agents). In the model we: describe the mechanism design for negotiations (the constraint state space); specify the players and their characteristics (proposal state space),
provide rules for evaluating data requests and data offers and; design algorithms for generating and selecting counter proposals using various concession strategies (negotiation state space). 
     We implemented the model in Java and designed simulation experiments to evaluate our model.  We have obtained data that relates concession strategies to probability of negotiated agreement and, relates choice of concession strategy and agent surplus when negotiation terminates. From our simulation results we abstract propositions that govern the outcomes in the privacy bargaining game.

References
Hagel, John and Jeffrey Rayport. ìThe Coming Battle for Customer Informationî. The McKinsey Quarterly, 3, 65ó76 (1997). (reprinted by special permission from the JanuaryóFebruary 1997 issue of the Harvard Business Review).
Abela, Andrew and A.M. Sacconaghi, Jr. ìValue Exchange: The Secret of Building Customer Relationships On Lineî. The McKinsey Quarterly, 2 (1997).
Faratin, P, Sierra, C and N. R. Jennings (1998) ìNegotiation Decision Functions for Autonomous Agents.î Int. Journal of Robotics and Autonomous Systems 24 (3-4) 159-182