A Multi-Attribute Reverse Auction Model on Margin Bidding

Abstract

Multi-attribute reverse auction has many advantages for the buyer with the multi-dimensional attribute requirements. However, it is hard to design an optimal auction mechanism for the scenario in practice. Therefore, this paper presents a method transforming multi-attribute auction into single-attribute auction by bidding in deposit. The analysis indicates that our method can reduce not only the transaction risk caused by the supplier’s bid abandonment but also the operating cost and complexity of the multi-attribute auction. Besides, our method meets the incentive compatibility and participation constraint conditions by promising that the highest bidding supplier is the winner in the Auction and can obtain higher expected profits than traditional auctions for the buyer.