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Competing sellers in online markets: reserve prices, shill bidding and auction fees

Competing sellers in online markets: reserve prices, shill bidding and auction fees
Competing sellers in online markets: reserve prices, shill bidding and auction fees
In this paper, we consider competition between sellers offering similar items in concurrent online auctions, where each seller must set its individual auction parameters (such as the reserve price) in such a way as to attract buyers. We show that there exists a pure Nash equilibrium in the case of two sellers with asymmetric production costs. In addition, we show that, rather than setting a reserve price, a seller can further improve its utility by shill bidding (i.e., pretending to be a buyer in order to bid in its own auction). But, using an evolutionary simulation, we show that this shill bidding in- troduces inefficiences within the market. However, we then go on to show that these inefficiences can be reduced when the mediating auction institution uses appropriate auction fees that deter sellers from submitting shill bids.
Mechanism Design, Competition, Shill Bidding, Auction Fees
1208-1210
Gerding, E.H.
d9e92ee5-1a8c-4467-a689-8363e7743362
Rogers, A.
f9130bc6-da32-474e-9fab-6c6cb8077fdc
Dash, R.K.
688bf118-f42f-42bc-80f7-e915330f85d5
Jennings, N. R.
ab3d94cc-247c-4545-9d1e-65873d6cdb30
Gerding, E.H.
d9e92ee5-1a8c-4467-a689-8363e7743362
Rogers, A.
f9130bc6-da32-474e-9fab-6c6cb8077fdc
Dash, R.K.
688bf118-f42f-42bc-80f7-e915330f85d5
Jennings, N. R.
ab3d94cc-247c-4545-9d1e-65873d6cdb30

Gerding, E.H., Rogers, A., Dash, R.K. and Jennings, N. R. (2006) Competing sellers in online markets: reserve prices, shill bidding and auction fees. Fifth International Joint Conference on Autonomous Agents and Multiagent Systems (AAMAS-06), Japan. pp. 1208-1210 .

Record type: Conference or Workshop Item (Paper)

Abstract

In this paper, we consider competition between sellers offering similar items in concurrent online auctions, where each seller must set its individual auction parameters (such as the reserve price) in such a way as to attract buyers. We show that there exists a pure Nash equilibrium in the case of two sellers with asymmetric production costs. In addition, we show that, rather than setting a reserve price, a seller can further improve its utility by shill bidding (i.e., pretending to be a buyer in order to bid in its own auction). But, using an evolutionary simulation, we show that this shill bidding in- troduces inefficiences within the market. However, we then go on to show that these inefficiences can be reduced when the mediating auction institution uses appropriate auction fees that deter sellers from submitting shill bids.

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Published date: 2006
Venue - Dates: Fifth International Joint Conference on Autonomous Agents and Multiagent Systems (AAMAS-06), Japan, 2006-01-01
Keywords: Mechanism Design, Competition, Shill Bidding, Auction Fees
Organisations: Agents, Interactions & Complexity

Identifiers

Local EPrints ID: 262585
URI: https://eprints.soton.ac.uk/id/eprint/262585
PURE UUID: 08eddea5-d4c0-42e0-97a9-d99d9a369b11
ORCID for E.H. Gerding: ORCID iD orcid.org/0000-0001-7200-552X

Catalogue record

Date deposited: 16 May 2006
Last modified: 17 Jul 2019 00:52

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