The University of Southampton
University of Southampton Institutional Repository

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
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.
d9e92ee5-1a8c-4467-a689-8363e7743362
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.
d9e92ee5-1a8c-4467-a689-8363e7743362
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), India. 06 - 12 Jan 2007. pp. 1287-1293 .

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.

PDF
ijcai07-gerding.pdf - Other
Download (326kB)

More information

Published date: 2007
Additional Information: Event Dates: January 6-12, 2007
Venue - Dates: Twentieth International Joint Conference on Artificial Intelligence (IJCAI-07), 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: https://eprints.soton.ac.uk/id/eprint/263493
PURE UUID: 2f2509c9-15a9-4cc7-a493-2edb2ef13815
ORCID for Enrico H. Gerding: ORCID iD orcid.org/0000-0001-7200-552X

Catalogue record

Date deposited: 19 Feb 2007
Last modified: 07 Jun 2019 00:34

Export record

Download statistics

Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.

View more statistics

Atom RSS 1.0 RSS 2.0

Contact ePrints Soton: eprints@soton.ac.uk

ePrints Soton supports OAI 2.0 with a base URL of https://eprints.soton.ac.uk/cgi/oai2

This repository has been built using EPrints software, developed at the University of Southampton, but available to everyone to use.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive cookies on the University of Southampton website.

×