Design of online auctions: Proxy versus non-proxy settings

Recent years have witnessed the rapid development of online auctions. Currently, some online auctions, such as eBay, introduce a proxy bidding policy, under which bidders submit their maximum bids and delegate to a proxy agent to automatically outbid other competitors for the top bidder, whereas other online auctions do not. This paper compares these two widely used auction mechanisms (proxy setting and non-proxy setting) and characterizes the equilibrium bidding behavior and the seller's expected revenue. We find the proxy auction outperforms the non-proxy auction in terms of the seller's expected revenue. This dominance result is not prone to the specific bid announcement policy, the bidder's knowledge regarding the number of bidders, the impact of traffic congestion along the bidding process, the number of items sold through the auction, and the existence of a reserve price.We further find that the proxy setting usually fails to sustain the truthful bidding as a dominant strategy equilibrium even if no minimum bid increments are adopted, and the possibility of a low-valuation-bidder dilemma where the low-valuation bidders could be better off if all bidders collude to bid at the last minute. We also discuss the dramatically different equilibrium bidding behaviors under the two auction mechanisms.     

A Multi-attribute bidding strategy for a single-attribute auction marketplace

Auctions and negotiations are important mechanisms of economic exchange. Negotiations are less structured as they involve exchange of offers by both parties. They may involve several issues and new issues can be added in the course of negotiations. Auctions, on the other hand are highly structured, and thus they are much amenable to automation. However, most existing auctions involve bidding on a single issue (price). This is an obvious limitation as participants may have different preferences over multiple attributes of a given type of product or service. This paper proposes an approach by which a software agent solution could effectively implement a multi-attribute bidding strategy for single-attribute auction marketplaces. This allows to significantly expand the set of potential auctions to bid on, while assuring the minimum utility level for the bidder at a given point in time. The bidding model is based upon concession-making curve introduced in prior work on electronic negotiations. Using data collected from eBay the paper shows that bidding across several attributes would result in higher utility outcome, and faster results than bidding within a single attribute set.     

Bidding behavior in dynamic auction settings: An empirical analysis of eBay

We study the impact of dynamic environment of eBay auctions on bidding behavior. Due to high-speed Internet and practically costless search possibilities, bidding behavior is no longer a function of characteristics of a single auction but depends on auctions running simultaneously, completed auctions, available Buy-It-Now prices as well as various outside options. We study how this dynamic market affects a bidder’s choice of participating in an auction or leaving eBay for an outside alternative. We analyze Texas Instruments (TI-83) Graphing Calculator auctions presented on eBay. We estimate a random-effects probit model to study bidders’ probability of staying in eBay, while controlling for unobservable individual-specific heterogeneity. Our main result shows that Market Tightness – the ratio of bidders to sellers – has a negative and significant effect on bidders’ decision to remain in eBay. Moreover, variables containing information from other eBay auctions significantly affect bidders’ participation decision, thus emphasizing the importance of the dynamic, multi-auction environment in eBay marketplace for potential buyers.     

Bidder's strategy under group-buying auction on the Internet

The group-buying auction is a new kind of dynamic pricing mechanism on the Internet. It is a variant of the sellers' price double auction, which makes the bidders as a group through Internet to get the volume discounts, i.e., the more bidders bid, the lower the price of the object being auctioned becomes. In this paper, we analyze the group-buying auction under some assumptions, such as that the independent private values (IPVs) model applies and bidders are risk neutral and symmetric, etc., and build an incomplete information dynamic game model to illustrate the bidders' bidding process. It proves that for the bidders there exists a weakly dominant strategy S, i.e., no matter when a bidder arrives at the auction and what the bidding history is, the highest permitted bid price that is no greater than his value to the object is always his optimal bid price but may not be the unique one.     

Simultaneous Independent Online Auctions with Discrete Bid Increments

Decentralized multi-item auctions offer great opportunities for integrating fragmented online auction markets into larger markets with more efficient outcomes. This paper extends the theory of multi-item ascending auctions of substitutes by considering any finite positive bid increment and allowing the bidders to bid asyn-chronously instead of bidding in a round-robin fashion. We consider a setup where the bidders utilities over multiple items are additive and bound the maximum inefficiency in the allocation when the bidders follow a simple greedy strategy. We also obtain the limits within which the prices of individual items can vary from one outcome to another. For the special case of single unit bidder demand, we also bound the maximum surplus which a bidder can extract by unilaterally switching to some other strategy. The paper suggests an upper bound for the minimum required bid increment which would be necessary for competitive price discovery and truthful bidding in a practical online implementation.The work was done while the author was with IBM Research.     

Maximizing sellers’ welfare in online auction by simulating bidders’ proxy bidding agents

This paper presents an agent-based simulation model to estimate the effects of auction parameters on the auction outcomes, and to find an optimal or, at least, a near-optimal infrastructure. In particular, this study intends to study how bidders’ personalities and bidding strategies with other auction parameters affect the closing prices in two auction mechanisms: English and Yankee auction. Experimental results show that the aggregated outcome of multiple English auctions is more favorable to auctioneers and sellers than that of a corresponding single Yankee auction. It is also shown that raising minimum bid increment or bid starting price positively affects the closing prices in both auction types. However, two auction systems respond differently to the changes in parameter values in terms of magnitude and robustness. Further, it is noted that the closing price of an auction is negatively related to the proportion of risk-takers who adopt sniping strategy to submit their bids. As the proportion of risk-takers increases, the closing price significantly decreases in hard-ending auctions (eBay-like system), but only marginally in soft-ending auctions (Amazon-like system). In particular, soft-ending auctions with less snipers and a longer time window of automatic extension return the most favorable closing price to sellers.     

基于带惩罚的点概率距离策略优化算法在展示广告实时竞标中的研究

实时竞价(RTB)是在线展示广告中被广泛采用的广告投放模式,针对由于RTB拍卖环境的高度动态性导致最佳出价策略难以获得的问题,提出了一种基于强化学习(RL)的出价策略优化方法,即采用带惩罚的点概率距离策略优化(POP3D)算法来学习最佳出价策略。在基于POP3D的出价框架中,广告投标过程被建模为情节式的马尔可夫决策过程,每个情节被划分为固定数量的时间步,每个广告展示的出价由它的预估点击率大小和竞标因子共同决定。每个时间步,竞标代理都会根据上一时间步的拍卖情况对竞标因子进行调整,以使得出价策略能够适应高度动态的拍卖环境,竞标代理的目标是学习最佳的竞标因子调整策略。在iPinYou数据集上的实验结果表明,与DRLB算法相比,所提出价算法在预算比例为1/16和1/32时,在点击次数方面均提升了0.2%;当预算比例为1/8、1/16和1/32时,在赢标率方面分别提升了1.8%、1.0%和1.7%;另外,在稳定性方面,所提方法也具有优势。表明了该方法的优越性。     

Bidder behaviours on eBay: collectibles and commodities

In the past decade, online auctioning has become one of the most successful business innovations. eBay is the global leader in this marketspace. This paper focuses on understanding bidder behaviour in order to provide insight into the design of information systems to support online auctions. In contrast to previous work that uses discrete bidding information, we implement a functional viewpoint of the bidding path. The similarity between paths is measured in the functional space using L₂ distance, which allows us to utilize K-means and PAM clustering methods. We apply this method to a large sample of collectible (1968 Camaro) and commodity (Digital Camera) eBay auction data to explore current bidding behaviours. We identify two different clusters of bidding behavior across both items which is associated with a specific winning percentage. Sniping exists as the dominant behaviour, but a hybrid approach has emerged (Sentry + Sniping).     

Distributed ascending proxy auction — A cryptographic approach

In recent years, auctions have become a very popular price discovery mechanism in the Internet. The common auction formats are typically centralized in nature. The peer-to-peer paradigm demands gearing up auctions for decentralized infrastructures. In this context, this paper proposes a distributed mechanism for ascending second-price auctions that relies on standard cryptographic algorithms. In essence, the auction protocol has the capability of preserving the privacy of the winning bidder’s true valuation. The auction protocol makes use of a high number of auctioneers divided into several groups. A bidder creates an encrypted chain of monotonously increasing bidding steps, where each bidding step can be decrypted by a different auctioneer group. This considerably reduces the attack and manipulation possibilities of malicious auctioneers. In addition, this secure approach does not require bidders to be online unless they are submitting their bid chain to the auctioneers.     

无收据的密封式电子拍卖协议

提出一个高效的无收据密封式电子拍卖协议，无收据的意义是在协议进行过程中没有可以作为“收据”的公开数据，从而能够更好地保证竞拍者的安全。与现有的无收据密封式电子拍卖协议相比，该文的协议在竞拍价格变化较大的情况下，效率有很大的提高。     

基于区块链的密封式投标拍卖方案

随着互联网技术的飞速发展,传统拍卖正逐渐转变为电子拍卖,其中隐私保护越来越受到关注。针对当前电子投标拍卖系统中出现的问题,如竞买人隐私存在被泄露的风险、第三方拍卖中心的费用昂贵、第三方拍卖中心可能与竞买人勾结等,提出一种基于区块链智能合约技术的密封式投标拍卖方案。该方案充分利用区块链的去中心化、防篡改和可信赖性等特征构建了一个无第三方的拍卖环境,并通过区块链上的安全保证金策略约束竞买人的行为,从而提高密封式电子拍卖的安全性。同时该方案利用Pedersen承诺保护竞买人的竞拍价格不被泄露,并通过Bulletproofs零知识证明协议验证中标价格的正确性。安全性分析和实验结果表明,提出的拍卖方案满足安全性要求,各个阶段的时间消耗均在可接受范围内,满足日常拍卖要求。     

The design and implementation of a secure auction service

We present the design and implementation of a distributed service for performing sealed bid auctions. This service provides an interface by which clients, or “bidders”, can issue secret bids to the service for an advertised auction. Once the bidding period has ended, the auction service opens the bids, determines the winning bid, and provides the winning bidder with a ticket for claiming the item bid upon. Using novel cryptographic techniques, the service is constructed to provide strong protection for both the auction house and correct bidders, despite the malicious behavior of any number of bidders and fewer than one third of the servers comprising the auction service. Specifically, it is guaranteed that: bids of correct bidders are not revealed until after the bidding period has ended; the auction house collects payment for the winning bid; losing bidders forfeit no money; and only the winning bidder can collect the item bid upon. We also discuss techniques to enable anonymous bidding     

Conceptualizing means-end chains of user goals as networks

Goals are desired states that an individual tries to attain. The process of achieving a goal can be represented as interlinked means-end chains of user goals that have been traditionally visualized as hierarchies. Evidence in recent literature suggests that a network structure would be more appropriate and provide insight into a user's process of seeking a goal. We investigated user goal means-end chains for the eBay online auction system, and produced its structure as a goal network. To analyze this network and assess the importance of various goals, social network analysis measures were used (specifically, degree and flow-betweenness centrality). In addition, goal networks for users with low and high IS value were created and differences in goal importance in the two groups were considered. Results revealed that the most important user goals are closely related to key features of the auction system; users with high IS value want to use eBay to buy, sell, and bid for products, while users with low IS value seem to avoid using eBay because of uncertain price bidding. As such, the results of our study suggest that differences in IS value may be due to differences in IS usage. IS designers, marketers, and providers of online auction system can use our findings to design and promote better systems for their users.     

New Sealed-Bid Electronic Auction with Fairness,Security and Efficiency

Electronic sealed-bid auction schemes usually have a common drawback, the third party （auction host） can conspire with a malicious bidder to leak all bidding prices before the opening stage. It results in the malicious bidder wining the auction with an optimal bidding price. Recently, Liaw et al. proposed an auction protocol for electronic online bidding in which they designed a deposit deduction certification for government procurement. However, it also has above mentioned flaw. Moreover, we further found that there were some extra security drawbacks in their protocol. First, the bidder can forge a bidding receipt to claim that he/she is a valid auction winner. Second, it may suffer from the third party forging attack. Third, their protocol leaked some bidders＇ private information to the third party, such as the bidder＇s bank account number and the authorization code. Thus, it cannot protect the bidder＇s privacy at all. In this paper, we not only point out the drawbacks from the previous scheme but also propose a new electronic auction scheme to overcome the above mentioned drawbacks. Furthermore, the computational complexity can be decreased in our online sealed-bid auction scheme.     

Understanding auction fever: a framework for emotional bidding

Auction fever is a multifaceted phenomenon that is frequently observed in both traditional and Internet auctions. In order to gain a better understanding of its causes, we develop a conceptual framework to analyze emotions in auctions, which is based on an exhaustive literature review. The framework integrates rational calculus with emotional aspects and suggests that emotional processing is triggered at three different stages of an auction: First, the economic environment can affect a bidder’s level of perceived competition and thus influence the bidding strategy prior to the auction. Second, auction events may have ramifications on the bidder’s emotional state during the auction due to previous investments or perceived ownership. Third, past auction outcomes may impact future bidding behavior through emotions such as the joy of winning or loser regret. Auction fever, eventually, is a phenomenon that results from the interplay of these emotional processes and causes a bidder to deviate from an initially chosen bidding strategy.     

An options-based solution to the sequential auction problem

The sequential auction problem is commonplace in open, electronic marketplaces such as eBay. This is the problem where a buyer has no dominant strategy in bidding across multiple auctions when the buyer would have a simple, truth-revealing strategy if there was but a single auction event. Our model allows for multiple, distinct goods and market dynamics with buyers and sellers that arrive over time. Sellers each bring a single unit of a good to the market while buyers can have values on bundles of goods. We model each individual auction as a second-price (Vickrey) auction and propose an options-based, proxied solution to provide price and winner-determination coordination across auctions. While still allowing for temporally uncoordinated market participation, this options-based approach solves the sequential auction problem and provides truthful bidding as a weakly dominant strategy for buyers. An empirical study suggests that this coordination can enable a significant efficiency and revenue improvement over the current eBay market design, and highlights the effect on performance of complex buyer valuations (buyers with substitutes and complements valuations) and varying the market liquidity.     

Computing price trajectories in combinatorial auctions with proxy bidding

Proxy bidding has proven useful in a variety of real auction formats – most notably eBay – and has been proposed for the nascent field of combinatorial auctions. Previous work on proxy bidding in combinatorial auctions requires the auctioneer to run the auction with myopic bidders to determine the outcome. In this paper, we present a radically different approach that computes the bidders’ allocation of their attention across the bundles only at “inflection points”. Inflections are caused by the introduction of a new bundle into an agent’s demand set, a change in the set of currently competitive allocations, or the withdrawal of an agent from the set of active bidders. This approach has several advantages over alternatives, including that it computes exact solutions and is invariant to the magnitude of the bids.     

基于歧视性的第二价格拍卖算法的激励机制

在基于对等网(P2P)的大数据实时应用中,针对如何遏制视频点播(VOD)系统中的节点搭便车行为,提出了基于歧视性的第二价格拍卖算法的激励机制。节点之间以分布式动态拍卖的方式获取各自所需视频数据块,拍卖中,拍卖节点首先根据歧视性原则判断竞标节点的预算是否足以参与竞标,并根据允许参与竞标的节点数目设置上传带宽;然后根据竞标节点的出价确定赢得竞标的节点;最后竞标节点在接收到数据块后根据第二价格方案支付拍卖节点仅次于拍卖最高价格的第二高价格的要价作为节点的收益。分析节点的收益、节点带宽的利用率以及贡献节点/自私节点的比例,表明该方案能有效地激励节点积极地参与视频数据块的共享,同时高效地利用节点的上传带宽。     

The relationship between website quality,trust and price premiums at online auctions

This study measures the value of website quality in terms of its impact on trust, intention to transact and price premiums. Prior research on online auctions has focused on the use of reputation systems for building trust in online auction vendors and subsequently to generate price premiums. This study examines the extent to which trust can be induced by improving the quality of online auction listings. A survey of 701 eBay users is conducted which compares the price premiums of two nearly identical online auction businesses, one that has online auction listings with a perceived high quality and the other that has substantially lower perceived quality. Results of this study indicate that website quality can explain 49% of the variation in the trust for eBay sellers. In fact, it shows that sellers with good website quality are all perceived to be equally trustworthy regardless of their eBay reputation; whereas sellers with poor website quality are not perceived to be trustworthy even if they have a high eBay reputation score. The results also show that the trust resulting from increased website quality increases intention to transact and results in price premiums of 12% (on average) for sellers with higher quality listings. Theories from marketing, economics, and social psychology are used to explain why website quality induces trust in unknown vendors without providing any concrete evidence regarding the vendor’s past history.