Abstract
We are entering the era of digital business moments where autonomous things will buy and sell services from each other in order to make people’s life easier. They will also negotiate in order to achieve the best price for their services which will result in Internet of Things auctions. Such auctions will be combinatorial and recurrent. Recurrent auctions pose a problem of bidder drop which leads to market collapse. Moreover, in Internet of Things, bidders will employ different strategies according to their pattern of consuming resources. We describe two bidding strategies which may lead to market collapse or very low revenue: opportunistic and periodic bidding. We devise two algorithms: revenue maximizing auction and highest bid lock auction, analyze their performance under these two bidding strategies, and compare them to traditional combinatorial auction. We find out that the revenue maximizing auction prevents market collapse under opportunistic bidding while highest bid lock auction provides the highest revenue under both strategies.
Highlights
With the rapid development of Internet of Things (IoT), more and more devices are connected and can perform tasks without human intervention.[1]
We show that the highest bid lock auction (HBLA) is able to both prevent market collapse in opportunistic bidding and increase revenue above traditional combinatorial auction (TCA) in periodic bidding
We develop HBLA which achieves the same result as revenue maximizing auction (RMA) for opportunistic bidding and outperforms both RMA and TCA in periodic bidding
Summary
With the rapid development of Internet of Things (IoT), more and more devices are connected and can perform tasks without human intervention.[1]. Bidders (e.g. an advertising company) are interested in getting resources as often as possible or at least every specified number of rounds To increase their chances of winning, they will start from their maximum possible value and lower the bids in subsequent rounds. Opportunistic bidding is more predictable because bidders reveal the maximum value they are ready to pay It is less aggressive in terms of individual bidder behavior since the price drop is not very severe, but it leads to more severe bidder drop, which causes market collapse in the long run, than periodic bidding.
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