English Auction Research Articles

Incentive Compatible E-mandi with Large Scale Consumer Producer Matching Using BigData Based on Gale-shapely Algorithm for Perishable Commodities SCM

In this paper, we propose to transform the global matching mechanism in an electronic exchange between the producers and consumers in the SCM system for perishable commodities over large scale data sets. Matching of of consumers and producers satisfactions are mathematically modeled based on preferential evaluations based on the bidding request and the requirements data which is supplied as a matrix to Gale Shapely matching algorithm. The matching works over a very transparent approach in a e-trading environment over large scale data. Since, Bigdata is involved; the global SCM could be much clearer and easier for allocation of perishable commodities. These matching outcomes are compared with the matching and profit ranges obtained using simple English auction method which results Pareto-optimal matches. We are observing the proposed method produces stable matching, which is preference-strategy proof with incentive compatibility for both consumers and producers. Our design involves the preference revelation or elicitation problem and the preference-aggregation problem. The preference revelation problem involves eliciting truthful information from the agents about their types that are used for computation of Incentive compatible results. We are using Bayesian incentive compatible mechanism design in our match-making settings where the agents’ preference types are multidimensional. This preserves profitability up to an additive loss that can be made arbitrarily small in polynomial time in the number of agents and the size of the agents’ type spaces.

An Efficient Electronic English Auction System with a Secure On-Shelf Mechanism and Privacy Preserving

With the rapid development of the Internet, electronic commerce has become more and more popular. As an important element of e-commerce, many Internet companies such as Yahoo! and eBay have launched electronic auction systems. However, like most electronic commerce products, safety is an important issue that should be addressed. Many researchers have proposed secure electronic auction mechanisms, but we found that some of them do not exhibit the property of unlinkability, which leads to the leakage of users’ privacy. Considering the importance of privacy preservation, we have designed a new auction mechanism. Through symmetrical key establishment in the registration phase, all messages transmitted over the Internet would be protected and, meanwhile, achieve the property of unlinkability. The security analysis and performance analysis show that our protocol fulfills more security properties and is more efficient for implementation compared with recent works.

Selling to Advised Buyers

In many cases, buyers are not informed about their valuations and rely on experts, who are informed but biased for overbidding. We study auction design when selling to such “advised buyers.” We show that a canonical dynamic auction, the English auction, has a natural equilibrium that outperforms standard static auctions in expected revenues and allocative efficiency. The ability to communicate as the auction proceeds allows for more informative communication and gives advisors the ability to persuade buyers into overbidding. The same outcome is the unique equilibrium of the English auction when bidders can commit to contracts with their advisors. (JEL D44, D82, D83, D86)

The Future of Price: Communicative Infrastructures and the Financialization of Indian Tea

For more than 150 years, most tea grown on plantations in northeast India has been sold in open-outcry auctions in Kolkata. In this essay, I describe how, in 2009, the Tea Board of India, the government regulator of the tea trade, began to convert auctioning from a face-to-face outcry process to a face-to-computer digital one. The Tea Board hoped that with the implementation of digital technologies, trade would soon revolve around the buying and selling of futures contracts, not individual lots of tea. Despite these efforts, the tea industry has thus far resisted all attempts at financialization. That so prominent a commodity as tea has yet to be financialized provides a unique opportunity to examine the how of financialization—the governmental and technical steps that precede futures and other kinds of derivatives markets. Futures markets rely on a standardized notion of price and of the material things being priced. The story of Indian tea’s resistance to financialization shows how such standardization requires not just a disentangling of commodities at the level of productive infrastructure (that is, the separation of individual trader and thing being traded) but also a reworking of the communicative infrastructure of trading. In this essay, I analyze this reworking by examining the effort to reform how tea is priced at auction. Specifically, I describe a transition in tea valuation from socially embedded price stories to standardized price scenarios.

Refinements to the MLB-NPB Posting System

We theoretically and experimentally analyze recent changes in the posting system used by Japan’s Nippon Professional Baseball (NPB) organization and the U.S. Major League Baseball (MLB) organization to transfer the rights of NPB players from NPB teams to MLB teams. Under the old system—a sequential, first-price sealed-bid auction among MLB teams for player negotiation exclusivity rights—the NPB team enjoyed considerable surplus from lucrative posting fees. We predict that the revised system—an English auction with an entry fee—will transfer most of the NPB’s middleman benefits (posting fees) to the players through higher salaries. Additionally, we analyze a third, proposed but not adopted, mechanism—a weighted-average sealed-bid auction. Our experimental results confirm our theoretical predictions. Furthermore, under the new system, efficiency is greatest, MLB teams spend less on Japanese players, and the players’ salaries increase significantly.

How Do Land Auction Formats Influence the Market Structure and Aggregate Surplus of Real Estate Development?

This article proposes a duopoly dynamic game theoretic model to investigate the market structure and aggregate surplus of real estate development when land is sold in a sealed‐bid first price auction vis‐à‐vis an open English auction. It relaxes the assumption of symmetric bidders. The land values have common value and private value components. We find that the sealed‐bid first price auction introduces competition in the real estate development market. The open English auction leads a monopoly market. State agencies are recommended to increase the aggregate surplus of real estate development by publishing past bidding information under the sealed‐bid first price auction and reducing information asymmetry between bidders.

An experimental study of signaling in auctions with a flexible reserve price

This paper presents the results of an experimental study of preemptive jump bidding in English auctions with a flexible reserve price. While one of the possible explanations for jump bidding is based on signaling arguments, the ability of the seller to adjust his decision to accept an offer based on the bidding history makes the existence of a signaling equilibrium questionable. This paper shows that the seller's ability to set the reserve price after observing the opening bid reduces both jump bidding behavior and the use and interpretation of opening bids as a signaling device.

THE INCREASE OF COMPETITION IN RUSSIAN PUBLIC PROCUREMENT: THE SEARCH FOR SOLUTIONS IN THE RULES OF PROCEDURES

The procurement activities of Russian government and municipal customers often arises the problem of choosing between splitting contracts in order to increase competition or attraction of large suppliers, known for the quality performance of its obligations, but not involved in petty trading. In order to solve the above problems the paper gives analysis of the effectiveness of the English auction used in Russian public procurement. One of the problems of the model is marked inability to complete the account the capacity of participants. In particular, participants are bidding solely on pre-formed combinations of goods, works and services under the contract. However, often there are situations when the price of goods, works and services depends on its number and combinations. Considering the above, the author offers a rebidding per unit stage or the transition to the use of auctions multiobject auctions recently developed by foreign researchers.

Does asymmetric information affect the premium in mergers and acquisitions?

AbstractWe test the influence of information asymmetry on the premium paid for an acquisition. We analyze mergers and acquisitions as English auctions. The theory of dynamic auctions with private and common value predicts that more informed bidders may pay a lower price. We test that prediction with a sample of 1,026 acquisitions in the United States between 1990 and 2007. We assume that blockholders of the target's shares are better informed than other bidders because they possess privileged information on the target. Our empirical results show that blockholders pay a much lower premium than do other buyers

Sequential English Auctions: A Theory of Opening-Bid Fishing

Cassady (1967) describes an auction in which the auctioneer "fishes" for an opening bid, calling out lower and lower amounts until an opening bid is eventually placed. Once a bid is placed, it is not uncommon for the bidding to escalate above the initial starting price. The current study explains this puzzle in a model in which an auctioneer sells an indivisible good via English ascending-price auction and cannot commit to keeping the item off the market should the initial starting price fail to elicit any bids. A key insight of the paper is that the well-known strategy equivalence between the English auction and the second-price auction fails to extend to the sequential setting. This difference has important implications for the equilibrium starting-price path, giving rise to a Coase conjecture in the English auction but not in the second-price auction.

Becoming the Neighbor Bidder: Endogenous Winner’s Curse in Dynamic Mechanisms

This paper addresses the problem of sequentially allocating time-sensitive goods, or one-period leases on a durable good, among agents who compete through time and learn about the common component of their valuation privately through experience. I show that efficiency is unattainable, and I identify simple variations of sequential second-price or English auctions that implement the second best and the revenue-maximizing auctions. When the units are divisible, I identify the corresponding auctions that allow for double sourcing. (JEL D44, D82)

Smarter than others? Conjectures in lowest unique bid auctions.

Research concerning various types of auctions, such as English auctions, Dutch auctions, highest-price sealed-bid auctions, and second-price sealed-bid auctions, is always a topic of considerable interest in interdisciplinary fields. The type of auction, known as a lowest unique bid auction (LUBA), has also attracted significant attention. Various models have been proposed, but they often fail to explain satisfactorily the real bid-distribution characteristics. This paper discusses LUBA bid-distribution characteristics, including the inverted-J shape and the exponential decrease in the upper region. The authors note that this type of distribution, which initially increases and later decreases, cannot be derived from the symmetric Nash equilibrium framework based on perfect information that has previously been used. A novel optimization model based on non-perfect information is presented. The kernel of this model is the premise that agents make decisions to achieve maximum profit based on imaginary information or assumptions regarding the behavior of others.

A Race Against the Clock: Auctioneer Strategies and Selling Mechanisms in Live Outcry Auctions

Using data from an original survey of practicing auctioneers, this paper examines the effect of binding time constraints on the auctioneer’s selling strategy in an outcry auction. We present a time-allocation model in which the length of time allocated to the sale of an item must be traded off against its realized price. This is applied to (1) the relationship between time allocation and the ex ante value of an item; (2) the effect of the reported variation over time of the number of bidders present, on both the time allocation and the order in which items of differing value are presented for sale; and (3) the auctioneer’s use of various bidding processes, such as batching and selling by choice, from the perspective of the auctioneer’s time-revenue tradeoff. Our results corroborate and provide theoretical underpinning for observed auctioneer behavior.

On bidding with securities: Risk aversion and positive dependence

DeMarzo et al. (2005) consider auctions in which bids are selected from a completely ordered family of securities whose values are tied to the resource being auctioned. The paper defines a notion of relative steepness of families of securities and shows that a steeper family provides greater expected revenue to the seller. Two assumptions are: the buyers are risk neutral; the random variables through which values and signals of the buyers are realized are affiliated. We show that this revenue ranking holds for the second price auction in the case of risk aversion. However, it does not hold if affiliation is relaxed to a less restrictive form of positive dependence, namely first order stochastic dominance (FOSD). We define the relative strong steepness of families of securities and show that it provides a necessary and sufficient condition for comparing two families in the FOSD case. All results extend to the English auction.

Procurement auctions and supply chain performance

While auction is typically considered a price-determination mechanism, it could also have a significant impact on supply chain performance. This paper analyzes possible auction and market mechanisms and their expected payoffs in a two-supplier, one-buyer system with asymmetric information, where the players׳ costs are private information and each supplier׳s cost is known only probabilistically by other players. The results show that the auction mechanism could have a significant impact on the payoffs received by the players and on system efficiency. Channel coordination can be achieved with a two-part contract auction where the buyer announces a price-sensitive order function and the suppliers compete in a reverse English auction on the side payment. To achieve the coordination, a market intermediary must prevent the buyer from manipulating the order function by imposing a restriction on the retail price. Thus, the buyer truthfully transfers the market demand function after recovering her unit handling cost to the suppliers. Insights from the analysis allow us to rank different market mechanisms by their impact on expected channel efficiency and the expected payoffs for the buyer and the suppliers.

The Role of Undisclosed Reserves in English Open Outcry Auctions

This study considers the role that reserve prices may play in residential property auctions. In comparison to much of the previous empirical work, this study has access to undisclosed reserve prices from English auctions. Consistent with theoretical arguments in the auction literature, the results obtained illustrate that while higher reserve prices increase the revenue obtained for the seller, they also reduce the probability of sale. The findings also highlight the importance of auction participation, with the number of individual bidders and the number of bids significant in most specifications.

A taxonomy of secure electronic English auction protocols

In this paper, a taxonomy of secure electronic English auction protocols that are widely used in online Internet auctions is outlined. Firstly, these schemes are classified into three classes according to their design philosophy: group-oriented signature-based protocols, trusted third party-based protocols, and pseudonym identity-based protocols. Secondly, the pros and cons of these schemes are identified and compared in light of different viewpoints. Thirdly, we analyzed the performance of these protocols, and we proposed new directions based on the insightful analysis of the existing work. This paper can be a roadmap for beginners in understanding the basic concepts of security issues, properties, and performance in electronic English auction scheme.

English Auctions with Ensuing Risks and Heterogeneous Bidders

English Auctions with Ensuing Risks and Heterogeneous Bidders

Spectrum Allocation Methods: Studying Allocation through Auctions

 Abstract—Auctions have been used as a mechanism of selling goods and services for thousands of years.The earliest example of auctions can be traced back to AD 195 when Roman Empire was auctioned off to Julianus. There are numerous examples of Auctions in our daily life but auctions caught the imagination of economists, governments and common people alike when spectrum rights were auctioned by FCC in 1994 in the US. Prior to using auctions for spectrum allocation other methods like administrative process, lottery and first-come-first serve were widely used. Since FCC's auction a number of countries switched to auctions for spectrum allocation because of there comparative advantages over other methods. This paper critically analysis the pros and cons of different methods used in spectrum allocation. The method of using Simultaneous Ascending Auctions in allocation of spectrum is discussed along with the advantages that may accrue from this method.

Land Auctions with Budget Constraints

This paper tests for the effects of financial constraints on open-bid English land auction prices and bids. It is argued that bidders’ ability to pay, taken as capital resources and/or capital budget constraints, influence bids and final auction prices. While high capital resource developers may elect to bid more than optimal to win auctions, or bidders may elect to pool resources in joint bidding, budget constraints imposed by firm-specific financial variables on the other hand are expected to restrict bids. Land auction data in Hong Kong are used to test systematically these predictions. It is found that a firm’s age, the number of winners in a joint bid, and firm status in the market are positively related to prices, all factors which may be attributed to a firm’s ability to finance the auction price. Firm size, internal funds, financing cost, debt capacity and existing capital expenditure are also shown to affect bids submitted in land auctions: firm size and internal funds are positively related to bid prices; while constrained debt capacity, financing cost and existing capital expenditure lower bids. The results are consistent with predictions that a firm’s financial constraints, and thus its effect on capital budgets, are relevant factors in predicting land auction outcomes. More generally, these findings confirm that similar financial factors that constrain corporate capital investment also influence directly acquisition of assets at auctions.