Formalizing a language for institutions and norms Marc Esteva Julian Padget Carles Sierra Artificial Intelligence Research Institute, IIIA Spanish Council for Scientific Research, CSIC 08193 Bellaterra, Barcelona, Spain. marc@iiia.csic.es sierra@iiia.csic.es tel:+34-93-5809570 Department of Computer Science University of Bath, BATH BA2 7AY, UK jap@cs.bath.ac.uk tel:+44-1225-826971 Abstract. One source of trust for physical trading systems is their physical assets and simply their presence. A similar baseline does not exist for electronic trad- ing systems, but one way in which it may be possible to create that initial trust is through the abstract notion of an institution, defined in terms of norms [19] and the scenes within which (software) agents may play roles in different trad- ing activities, governed by those norms. We present here a case for institutions in electronic trading, a specification language for institutions (covering norms, performative structure, scenes, roles, etc.) and its semantics and how this may be mapped into formal languages such as process algebra and various forms of logic, so that there is a framework within which norms can be stated and proven. 1 Introduction Human interaction very often follows conventions, that is, general agreements on lan- guage, meaning, and behaviour. By following conventions humans decrease uncertain- ties about the behaviour of others, reduce conflicts of meaning, create expectations about the outcome of the interaction and simplify the decision process by restricting to a limited set the potential actions that may be taken. These benefits explain why con- ventions have been so widely used in many aspects of human interaction: trade, law, games, etc. On some occasions, conventions become foundational and, more importantly, some of them become norms. They establish how interactions of a certain sort will and must be structured within an organization. These conventions, or norms, become therefore the essence of what is understood as human institutions [19]. This is so for instance in the case of auction houses, courts, parliaments or the stock exchange. Human institutions not only structure human interactions but also enforce individual and social behaviour by obliging everybody to act according to the norms. The benefits obtained in human organizations by following conventions become even more apparent when we move into an electronic world where human interactions are mediated by computer programs, or agents. Conventions seem necessary to avoid conflicts in meaning, to structure interaction protocols, and to limit the action repertoire in a setting where the acting components, the agents, are endowed with limited ratio- nality. The notion of electronic institution becomes thus a natural extension of human