"Electronic brokers will be required to permit even reasonably efficient levels and patterns of exchanges. Their ability to handle complex, albeit mechanical, transactions, to process millions of bits of information per second, and to act in a demonstrably even-handed fashion will be critical as this information market develops."
from [RESN95]

When necessary, human information searchers usually seek help from information intermediaries such as a librarian. More wealthy or more hasty information searchers, e.g. large companies and institutions (for which "time is money"), call in information brokers [1]. Both types of information searchers realise it is much better to farm out this task to intermediaries as they possess the required (domain-specific) knowledge, are better equipped to do the task, or because it simply is not their core business. It is only logical to follow this same line of thought when information on the Internet is needed.

The availability of safe payment methods on the Internet (which make it possible to charge users of an information service for each piece of information they download) will be a big incentive to make use of electronic intermediaries (and agents in general too) as searching for information and/or services in an "unintelligent" way will then not only cost time, it will also cost money. Moreover, weighing the pros and cons of several information providers becomes a very complicated task if you have to take their prices into account as well: (intermediary) agents are (very soon) much better at doing this compared to their human user, especially as they can take the various user preferences into account as well when deciding which provider is most suitable, and they are better able to keep an overview of all the possible suppliers (and their prices).


In [RESN95], five important limitations of privately negotiated transactions are given which intermediaries, whether human or electronic, can redress: [2]
Search costs.
It may be expensive for suppliers and users to find each other. On the Internet, for example, thousands of products are exchanged among millions of people. Brokers can maintain databases of user preferences and supplier (i.e. provider) advertisements, and reduce search costs by selectively routing information from suppliers to users.
Furthermore, suppliers may have trouble accurately gauging user demands for new products; many desirable items or services may never be offered (i.e. produced) simply because no one recognises the demand for them. Brokers with access to user preference data can predict demand.
Lack of privacy.
Either the "buyer" or "seller" may wish to remain anonymous, or at least to protect some information relevant to an exchange. Brokers can relay messages without revealing the identity of one or both parties. A broker can also make pricing and allocation decisions based on information provided by two or more parties, without revealing the information of any individual party.
Incomplete information.
The user may need more information than the supplier is able or willing to provide, such as information about product quality or customer satisfaction. A broker can gather product information from sources other than the product or service provider, including independent evaluators and other users.
Contracting risk.
A consumer (user) may refuse to pay after receiving a product, or a supplier may give inadequate post-purchase service. Brokers have a number of tools to reduce risk:
1. The broker can disseminate information about the behaviour of providers and consumers. "The threat of publicising bad behaviour or removing some seal of approval may encourage both producers and consumers to meet the broker's standard for fair dealing";
2. If publicity is insufficient, the broker may accept responsibility for the behaviour of parties in transactions it arranges, and act as a policeman on his own;
3. The broker can provide insurance against bad behaviour.
(The credit card industry already uses all three tools to reduce providers' and consumers' exposure to risk.)
Pricing Inefficiencies.
By jockeying to secure a desirable price for a product, providers and consumers may miss opportunities for mutually desirable exchanges. "This is particularly likely in negotiations over unique or custom products, such as houses, and markets for information products and other public goods, where free-riding is a problem. Brokers can use pricing mechanisms that induce just the appropriate exchanges". [3]

The Internet offers new opportunities for such intermediary/brokering services. Both human as well as electronic brokers are especially valuable when the number of participants is enormous (as with the stock market) or when information products are exchanged.
Electronic brokers can offer two further opportunities over human ones. Firstly, many brokering services require information processing; electronic versions of these services can offer more sophisticated features at a lower cost than is possible with human labour. Secondly, for delicate negotiations, a computer mediator may be more predictable, and hence more trustworthy, than a human one. [4]



Intermediary agents (i.e. brokers) force us to address some important policy questions. [5]
How do we weigh privacy and censorship concerns against the provision of information in a manageable form?
Whenever information products are brokered, privacy and censorship issues come to the fore. An electronic intermediary or agent can be of great help here, as it can more easily perform potentially troubling operations involving large amounts of data processing;
Should intermediaries be allowed to ask a fee for their services?
Should providers or intermediary services be permitted to charge fees, even if the information providers may not or do not? "Much of the information now exchanged on the Internet is provided free of charge and a spirit of altruism pervades the Internet community. At first glance, it seems unfair that an intermediary should make a profit by identifying information that is available for free, and some Internet user groups would likely agitate for policies to prevent for-profit brokering." But so long as the use of brokering services is voluntary, it helps some information seekers without hurting any others: anyone who does not wish to pay can still find the same information through other means, at no charge. Moreover: one pays for finding, not for the information itself. This is a well known problem also in the traditional/paper world.
Should intermediary activities be organised as a monopoly (for the sake of effectiveness) or should competitive parties provide them?
With intermediary, but especially with brokerage services, there is a tension between the advantages of competition and those of monopoly provision.
Firstly, a competitive market with many brokers will permit the easy introduction of innovations and the rapid spread of useful ones. Because of the rapid spread, however, the original innovator may gain little market advantage and so may have little reason to innovate in the first place. Patents or other methods of ensuring a period of exclusive use for innovations may be necessary.
Secondly, some services may be a natural monopoly (because of the nature of the services or information they deal with). Similarly, auction and other pricing services may be most effective if all buyers and sellers participate in the same market. One solution might be for all evaluations to be collected in one place, with brokers competing to sell different ways to aggregate them.
More generally: some aspects of brokering may be best organised as monopolies; others should be competitive.



Some think that computer (i.e. agent) intermediaries will replace human intermediaries. This is rather unlikely, as they have quite different qualities and abilities. It is far more likely that they will co-operate closely, and that there will be a shift in the tasks (i.e. queries) that both types handle. Computer agents (in the short and medium term) will handle standard tasks and all those tasks that a computer program (i.e. an agent) can do faster or better than a human can. Human intermediaries will handle the (very) complicated problems, and will divide these tasks into sub-tasks that can (but not necessarily have to) be handled by intermediary agents.
It may also be expected that many commercial parties (e.g. human information brokers, publishers, etcetera) will want to offer middle layer services. Although the most ideal situation would be one where the middle layer has one single contacting point for parties and agents from the other two layers, it is very unlikely that this will happen. However, this is not such a big problem as it looks, as it will also keep the levels of competition high (which very likely leads to better and more services being offered to both suppliers and users). Also, having more than one service provider in the middle layer does not mean that efforts will not be co-ordinated and that parties will not co-operate, as doing so not only enables them to offer better services, they will also be able to cut back on certain costs.

It lies outside the scope of this thesis to treat this subject in more detail. Further research is needed into this area, among others to make more reliable predictions about future developments with regard to these ("intermediary") issues.

[1] Human information intermediaries are persons or organisations that can effectively and efficiently meet information needs or demands. The difference between information intermediaries and information brokers, is that the former (usually) only asks for a reimbursement of any expenses that were made to fulfil a certain information need/demand (which may include a modest hourly fee for the person working on the task). Information brokers are more expensive (their hourly fees usually start at a few hundred guilders), but they will usually be able to deliver results in a much shorter span of time. They can also offer many additional services, such as delivering the requested information as a complete report (with a nice lay-out, additional graphs, etcetera), or current awareness services.
[2] Two comments should be made by this list. The first is that they are about a special class of intermediaries: brokers. The second comment relates to this speciality: the given limitations are strongly focused on information and services that have to be paid for and/or that call for some form of negotiation, while in this thesis this aspect of information and services is left aside (i.e. "ignored") most of the time;
[3] One intriguing class of mechanisms requires a broker because the budget balances only on average: the amount the producer receives in any single transaction may be more or less than the amount paid by the customer, and the broker pays or receives the difference.
[4] For example, suppose a mediator's role is to inform a buyer and a seller whether a deal should go through, without revealing either's reservation price to the other, since such a revelation would influence subsequent price negotiations. An independent auditor can verify that a software mediator will reveal only the information it is supposed to; a human mediator's fairness is less easily verified.
[5] See [RESN95].

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"Intelligent Software Agents on the Internet" - by Björn Hermans