Incorporating Autonomous Bargaining Capabilities into E-Commerce Systems

Abstract

Bundling is a technique e-commerce companies have adopted from traditional retail stores to increase the average order size. It has been observed that bargaining helps increase customer satisfaction while increasing the average order revenue for retailers. We propose a mathematical framework to incorporate bargaining capabilities with the product bundles provided by e-commerce websites. Our method creates a virtual agent that uses the modular Bidding-Opponent-Acceptance model for its bargaining strategy and the Thomas-Kilmann conflict mode instrument to model buyer behavior. We incorporate bargaining capabilities with bundles in an e-commerce system by using a negotiation agent that uses business logic for better strategy. It uses real-time data generated during a negotiation session, since the buyer behavior during a negotiation is crucial. No requirement exists for data from past negotiation sessions of the buyer, which removes bias as well as allowing for rapid changes to buyer behavior. The agent behavior can be altered by various hyperparameters. Our model provides utility metrics to measure buyer and agent satisfaction. Our results show that the agent successfully negotiates with humans from diverse backgrounds.