Sellers Competing for Buyers in Online Markets: Reserve Prices, Shill Bids, and Auction Fees
Sellers Competing for Buyers in Online Markets: Reserve Prices, Shill Bids, and Auction Fees
We consider competition between sellers offering similar items in concurrent online auctions through a mediating auction institution, 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 in the case of two sellers with asymmetric production costs, there exists a pure Nash equilibrium in which both sellers set reserve prices above their 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., bidding as a buyer in its own auction). This shill bidding is undesirable as it introduces inefficiencies within the market. However, through the use of an evolutionary simulation, we extend the analytical results beyond the two seller case, and we then show that these inefficiencies can be effectively reduced when the mediating auction institution uses auction fees based on the difference between the auction closing and reserve prices.
Auctions, Shill Bidding, Auction Fees, Evolutionary Algorithms
1287-1293
Gerding, Enrico H.
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Rogers, Alex
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Dash, Rajdeep K.
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Jennings, N. R.
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2007
Gerding, Enrico H.
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Rogers, Alex
f9130bc6-da32-474e-9fab-6c6cb8077fdc
Dash, Rajdeep K.
589f704a-00dd-4921-b4f4-e47362cc552f
Jennings, N. R.
ab3d94cc-247c-4545-9d1e-65873d6cdb30
Gerding, Enrico H., Rogers, Alex, Dash, Rajdeep K. and Jennings, N. R.
(2007)
Sellers Competing for Buyers in Online Markets: Reserve Prices, Shill Bids, and Auction Fees.
Twentieth International Joint Conference on Artificial Intelligence (IJCAI-07), Hyderabad, India.
06 - 12 Jan 2007.
.
Record type:
Conference or Workshop Item
(Paper)
Abstract
We consider competition between sellers offering similar items in concurrent online auctions through a mediating auction institution, 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 in the case of two sellers with asymmetric production costs, there exists a pure Nash equilibrium in which both sellers set reserve prices above their 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., bidding as a buyer in its own auction). This shill bidding is undesirable as it introduces inefficiencies within the market. However, through the use of an evolutionary simulation, we extend the analytical results beyond the two seller case, and we then show that these inefficiencies can be effectively reduced when the mediating auction institution uses auction fees based on the difference between the auction closing and reserve prices.
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ijcai07-gerding.pdf
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Published date: 2007
Additional Information:
Event Dates: January 6-12, 2007
Venue - Dates:
Twentieth International Joint Conference on Artificial Intelligence (IJCAI-07), Hyderabad, India, 2007-01-06 - 2007-01-12
Keywords:
Auctions, Shill Bidding, Auction Fees, Evolutionary Algorithms
Organisations:
Agents, Interactions & Complexity
Identifiers
Local EPrints ID: 263493
URI: http://eprints.soton.ac.uk/id/eprint/263493
PURE UUID: 2f2509c9-15a9-4cc7-a493-2edb2ef13815
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Date deposited: 19 Feb 2007
Last modified: 15 Mar 2024 03:23
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Contributors
Author:
Enrico H. Gerding
Author:
Alex Rogers
Author:
Rajdeep K. Dash
Author:
N. R. Jennings
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