67 Modeling e-Procurement as Co-adaptive Matchmaking with Mutual Relevance Feedback Reiko Hishiyama ⋆ and Toru Ishida Department of Social Informatics, Kyoto University, Yoshida honmachi, Sakyo-ku, Kyoto 606-8501, Japan hishiyama@kuis.kyoto-u.ac.jp, ishida@i.kyoto-u.ac.jp Abstract. This paper proposes a new e-procurement model for a large number of buyers and sellers interacting via the Internet. The goal of e-procurement is to create a satisfactory match between buyers’ demand and sellers’ supply. From our real-world experience, we view e-procurement as a process of negotiation to increase the matching quality of two corresponding specifications: one for buy- ers’ demand and another for sellers’ supply. To model scalable e-procurement, we propose a co-adaptive matchmaking mechanism using mutual relevance feed- back. In order to understand the nature of the mechanism, we have developed two types of software agents, called e-buyers and e-sellers, to simulate human buyers and sellers. Multiagent simulation results show that the matching quality is in- crementally improved if agents adaptively change their specifications. A realistic example is also provided to discuss how to extend our simulation to real-world e-procurement infrastructure. 1 Introduction In the procurement process, buyers and sellers incrementally develop their mutual knowledge through making a deal between specifications of buyers’ demand and sell- ers’ supply. This paper proposes a computational model of an e-procurement process with a large number of buyers and sellers using the Internet. The motivation behind this research is as follows. There is a need for e-procurement infrastructure conducive to supporting complex dealings while taking into account a process for adjusting speci- fications. Procurement activities between buyers and sellers require negotiation to find ideal matching between demand and supply specifications, and there is a strong demand from industries to make procurement activities more open so that buyers have access to more sellers. This enables buyers to explore purchasing possibilities and to increase the transparency of their transactions. To develop e-procurement infrastructure, however, we need an e-procurement simulation model to help understand market performance when the market is scaled up. According to literature on management science, in procurement, buyers and sellers share their purchasing and selling intentions through the exchange of information, ex- pectations and perceptions. Their creative collaboration [20] leads to a successful deal. Landerous et al. [14] propose a buyer-seller partnership model that consists of five ⋆ Reiko Hishiyama has been working in the procurement section of Japan Telecom Co., Ltd. M.W. Barley and N. Kasabov (Eds.): PRIMA 2004, LNAI 3371, pp. 67–80, 2005. c  Springer-Verlag Berlin Heidelberg 2005