Price Auction Research Articles

Split-Award Auctions and Supply Disruptions

Problem Definition: We consider a buyer that needs to source a fixed quantity. She faces several potential suppliers that might fail to deliver. The buyer conducts a procurement auction to determine contract suppliers and can choose between single-sourcing and multi-sourcing. If contract suppliers fail to deliver, the buyer tries to source from non-contract suppliers but has little bargaining power due to time pressure. Academic/Practical Relevance: The mitigation of supply risks plays an important role in procurement practice but attracted little attention in the academic analysis of procurement auctions. Academic research on multi-sourcing procurement auction typically analyzes these auctions as stand-alone events. In contrast, we investigate the influence of the auction design on the post-auction market structure and identify an effect favoring multi-sourcing. The insights provide procurement managers guidance for their sourcing decisions. Methodology: We apply game-theoretical methods to analyze a stylized model in which a cost-minimizing buyer needs to source from profit-maximizing suppliers who might fail to deliver. The buyer conducts a procurement auction to determine contract suppliers and can choose between single-sourcing and multi-sourcing. If contract suppliers fail to deliver, the buyer tries to source from a non-contract supplier. We assume that in this situation, the non-contract supplier has almost all the bargaining power. Results: First, we show that in such a setting multi-sourcing does not only reduce the supply risk but might also yield lower prices than single-sourcing. The sourcing decision affects the post-auction market structure such that being a non-contract supplier becomes less attractive in case of multi-sourcing. Second, if suppliers are heterogeneous regarding their disruption probabilities, less reliable suppliers will bid more aggressively than their more reliable competitors causing an adverse selection problem. Furthermore, we show that attracting an additional supplier can be risky as it can increase the auction price and the buyer’s total expenses. Managerial Implications: Our analysis reveals a pro-competitive effect of multi-sourcing. This effect is especially important if the buyer’s value for the item is substantially larger than suppliers’ production costs and for intermediate disruption probabilities.

Revising the Canon: How Andy Warhol Became the Most Important American Modern Artist

Quantitative analysis of narratives of art history published since 2000 reveals that scholars and critics now judge that Andy Warhol has surpassed Jackson Pollock and Jasper Johns as the most important modern American painter. Auction prices suggest that collectors share this opinion. Disaggregated analysis of the published narratives by decade reveals that Warhol first gained clear critical recognition as the leading Pop artist in the 1990s, and then as the most important American artist overall in the 2000s. This rise in Warhol’s status appears initially to have been a result of his enormous influence on Jean-Michel Basquiat, Keith Haring, and others in the cohort that transformed the New York art world in the 1980s, and subsequently of his persisting influence on leading artists around the world who have emerged since the 1990s, including Damien Hirst, Takashi Murakami, and Ai Weiwei. Warhol’s many radical conceptual innovations, that transformed both the appearance of art and the behavior of artists, made him not only the most important American artist, but the most important Western artist overall of the second half of the twentieth century.

Empirical Analyses of Nonlinear Effects of Reserve Prices on Ending Prices in Online Auctions

Empirical results about the effect of open reserve price on ending prices in auctions are mixed, with some researchers finding a positive effect on ending price and others reporting a negative or no effect. The objective of this research is to propose a new theoretical framework. First, without an open reserve price, auctions attract more bidders, resulting in increased competition and higher ending prices—a so-called competition effect. Second, a high open reserve price may serve as a price floor or a reference price, influencing bidders' valuations and increasing ending prices.Quantile regression is used, which has the advantage of providing robust parameter estimates of the effect of open reserve prices on ending prices for different levels of the reserve price. Estimates of a longitudinal data set for four products collected over a period of one year show an u-shaped relationship between open reserve prices and ending prices, where either no reserves or high reserves results in higher ending prices. By comparing ending prices of auctions with an open reserve versus a secret reserve, it is shown that open reserve prices have a reference-price effect rather than a price-floor effect.

How do sellers benefit from Buy-It-Now prices in eBay auctions?

In eBay “Buy-It-Now” auctions, sellers make a take-it-or-leave-it price (BIN-price) offer prior to the auction. A buyer can either buy the good at the BIN-price or start the auction. This article studies how eBay sellers set BIN-prices and whether they benefit from using them. We apply a new experimental approach that combines the advantages of the lab and the field: The experiment is conducted in the lab while using the eBay auction platform and eBay traders. We find that the eBay auction format leads to prices substantially below those expected in second-price auctions. Moreover, the publicly available information on eBay about buyer experience and bidding behavior correlates with the observed price deviation and sellers use this information strategically when deciding on their BIN-price. More experienced sellers ask for higher BIN-prices, whereas seller risk aversion does not affect their BIN-price. Compared to an eBay auction without a BIN-price, an auction with a BIN-price is more efficient and generates significantly higher revenue.

The Effect of Posted Prices on Auction Prices: An Empirical Investigation of a Multi-channel B2B Market

Multi-channel sales strategies have become common due to the usage of advanced information technologies. Yet, how one trading mechanism can influence the outcome of another, especially in the B2B market, is largely underexplored. This paper investigates the effect of price and quantity information from a pre-sales posted price channel on the performance of the century-old sequential Dutch auctions system. The pre-sales channel is conducted online preceding the auctions. Sellers can control the price and make a proportion of their stock available in the pre-sales. Anything left after the pre-sales is sold via the auctions. Our analysis of nearly 1.5 million flower lots reveals a positive effect where there are higher auction prices and total revenue for lots listed in the pre-sales than for lots that are not. The result holds even for lots with no actual sales in the pre-sales, indicating that buyers pay close attention to the additional information from the pre-sales posted price channel. By teasing out the information effect of pre-sales prices and pre-sales quantity on the auction prices, we evaluate a number of pricing strategies. The results suggest that selling at a high price in the pre-sales is still more beneficial than selling more by discounting prices.

Indian Tea: Robust Growth Amid Rising Challenges

Tea [ Camellia sinensis  (L.) O. Kuntze is most consumed drink in the world makes a vital contribution to the economy of the producing countries. India is the second largest tea producer and one of the world’s largest consumers of tea. The consumption rate in India has increased at a CAGR of 2.95%. Indian production has increased at a CAGR of 4.17% between 2010 to 2018 but slight falling trend in production have been noticed in 2018 and 2019. Black tea occupied major share and now-a-days expansion of green, herbal and flavor teas has been seen. A comparative growth of tea export, auction prices, price realization etc. of India and other major producing countries are presented. The COVID-19 pandemic blow comes just at a time when unit prices of Indian tea were on the rise for its better quality, but lockdowns severely affected the Indian auction price till 22nd week of 2020. The average monthly auction prices were gradually increased from INR 188.77/kg in June to INR 260.63 in August and has shown declining trends fetching INR 252.87 in September and INR 206.26/kg in October 2020. The auction prices were 2.5 times more since lockdown, which have impacted the gross margins in the September quarter. The price rise would certainly provide some relief to the Indian tea industry which has been struggled with consistent increasing production costs since 2014. The lockdown effect on production, market and export of Indian tea was comparatively severe than other major tea producing countries. Indian export target of 300 million kilograms (mkg) was set for 2020 but target was fell both in volume and value terms between January and June 2020 and target expected to be lower around 210 mkg. Though gradual increment of revenue has been observed but the year-on-year revenue growth rate of Indian tea industry has reduced significantly. In the present article growth of tea production, consumption, tea market, auction prices, revenue earning and impact of COVID-19 on tea prices from the global perspective are discussed. Since last few years recurring problems with low prices and high labour costs, unusual weather is intensifying in the Indian tea industry are also highlighted.

Self-Bidding in Generalised Second Price Auctions - the Case of the Compliance Mechanism in Google Shopping

Self-Bidding in Generalised Second Price Auctions - the Case of the Compliance Mechanism in Google Shopping

A Transaction Trade‐Off Utility Function Approach for Predicting the End‐Price of Online Auctions in IoT

To stimulate large‐scale users to participate in the big data construction of IoT (internet of things), auction mechanisms based on game theory are used to select participants and calculate the corresponding reward in the process of crowdsensing data collection from IoT. In online auctions, bidders bid many times and increase their bid price. All the bidders want to maximize their utility in auctions. An effective incentive mechanism can maximize social welfare in online auctions. It is complicated for auction platforms to calculate social welfare and the utility of each bidder’s bidding items in online auctions. In this paper, a transaction trade‐off utility incentive mechanism is introduced. Based on the transaction trade‐off utility incentive mechanism, it can make the forecasting process consistent with bidding behaviors. Furthermore, an end‐price dynamic forecasting agent is proposed for predicting end prices of online auctions. The agent develops a novel trade‐off methodology for classifying online auctions by using the transaction trade‐off utility function to measure the distance of auction items in KNN. Then, it predicts the end prices of online auctions by regression. The experimental results demonstrate that an online auction process considering the transaction utility is more consistent with the behaviors of bidders, and the proposed prediction algorithm can obtain higher prediction accuracy.

Semi-Nonparametric Estimation of Secret Reserve Prices in Auctions

Semi-Nonparametric Estimation of Secret Reserve Prices in Auctions

СХЕМА МНОГОШАГОВОГО ТЕОРЕТИКО-ИГРОВОГО АУКЦИОНА РАБОТОДАТЕЛЕЙ И РАБОТНИКОВ С ВОЗМОЖНЫМ ВОЗНИКНОВЕНИЕМ КОРРУПЦИИ

The game formalizes the game-theoretic model of the first price auction with many employers and em-ployees, implemented in l steps, with the possible occurrence of corruption. The first paragraph presents the statement of the problem, then the first price auction model is formalized with a number of assumptions. Next, corruption that occurs in this model and its effect on the auction process of the first price is considered, com-pared with the case of absence of corruption. At the end of the paper, we consider the statements formalizing the optimal anti-corruption auction scheme.

Blockchain technology based decentralized energy management in multi-microgrids including electric vehicles

This paper proposes an energy scheduling mechanism among multiple microgrids (MGs) and also within the individual MGs. In this paper, electric vehicle (EV) energy scheduling is also considered and is integrated in the operation of the microgrid (MG). With the advancements in the battery technologies of EVs, the significance of Vehicle-to-Grid (V2G) is increasing tremendously. So, designing the strategies for energy management of electric vehicles (EVs) is of paramount importance. The battery degradation cost of an EV is also taken into account. Vickrey second price auction is used for truthful bidding. To enhance the security and trust, blockchain technology can be incorporated. The market is shifted to decentralized state by using blockchain. To encourage the MGs to generate more, contribution index is allotted to each prosumer of a MG and to the MGs as a whole, depending on which priority is given during auction. The system was simulated using IEEE 118 bus feeder which consists of 5 MGs, which in turn contain EVs and prosumers.

Statistical Methods Used for Identification of Art Prices Determinants

The paper deals with the problem of determinants of the auction prices of the works of art. A special attention is given to the attributes of works of art i.e.: the name of artist, time of creation, format (size), theme, technique, signature and their influence on the level of auction prices. The author of the paper uses statistical methods to verify empirically the relationship between variables. The dependences have been explained by implementation of three methods ie.: analysis of variance ANOVA, multiple regression models and classification trees, with the use of the computer program STATISTICA. The analysis is based on the cross-section data on art auction results of several auction sessions in Poland. The empirical studies have shown that name of artist, year of creation and technique determine the auction prices of works of art. The influence of technique and signature is not important statistically.

Research on the Effect of Artificial Intelligence Real Estate Forecasting Using Multiple Regression Analysis and Artificial Neural Network: A Case Study of Ghana

To transition from conventional to intelligent real estate, the real estate industry must enhance its embrace of disruptive technology. Even though the real estate auction market has grown in importance in the financial, economic, and investment sectors, few artificial intelligence-based research has tried to predict the auction values of real estate in the past. According to the objectives of this research, artificial intelligence and statistical methods will be used to create forecasting models for real estate auction prices. A multiple regression model and an artificial neural network are used in conjunction with one another to build the forecasting models. For the empirical study, the study utilizes data from Ghana apartment auctions from 2016 to 2020 to anticipate auction prices and evaluate the forecasting accuracy of the various models available at the time. Compared to the conventional Multiple Regression Analysis, using artificial intelligence systems for real estate appraisal is becoming a more viable option (MRA). The Artificial Neural network model exhibits the most outstanding performance, and efficient zonal segmentation based on the auction evaluation price enhances the model’s prediction accuracy even more. There is a statistically significant difference between the two models when it comes to forecasting the values of real estate auctions.

The Effects of Neighboring Parties on the Value of Rights: Evidence from Timber Harvests

We study the effect that neighboring parties have on the economic rents from owing the rights to a natural resource. Our application uses winning bid prices from state timber auctions in three western states. We model and show how differing nearby neighbors increase the costs and risks associated with purchasing certain rights. Consistent with our hypotheses, the winning bid price of state-run timber auctions is inversely related to the length of the border that a third party shares with the harvesting area. The lower winning bid prices reflect an increase in the expected costs of protecting the rents due to the presence of potential third parties’ challenges to property rights. We further test our model when there is third party demand for other uses to the timber such as a scenic view. The results consistently show that when third parties potentially threaten property rights, the winning bid decreases.

Uniform Price Auctions with Budget Constrained Bidders: An Experimental Study on Budget Rules

Uniform Price Auctions with Budget Constrained Bidders: An Experimental Study on Budget Rules

The Effect of a Closing auction on Market Quality and Market Efficiency in the Stock Exchange of Hong Kong

Hong Kong introduced the Closing Auction Session (CAS) to the HKEX securities market in 2016. Under the CAS, trading is extended by an extra 8-10 minutes after the daily trading session ends at 16:00 to determine the closing price for the day. Trading under the CAS is in the form of a single price auction, at which buyers and sellers submit orders so that the trading system determines a market clearing closing price for each security and orders are executed at that price. CAS was introduced in three phases, covering constituent stocks of Hang Seng Composite LargeCap and MidCap Index since July 25, 2016, constituent stocks of Hang Seng Composite SmallCap Index since July 26, 2017, and all equities, funds, and leveraged and inverse products since October 8, 2019. The introduction of CAS is to meet the needs of some investors, such as index fund managers, who need to trade at the closing price. This study investigates the effect of CAS on market liquidity and price efficiency, two major aspects of financial market quality, to see whether it may safeguard against extreme price volatility and improves price efficiency. The analysis is conducted based on Hang Seng LargeCap and Midcap stocks after the introduction of CAS in July 2016. Since its inception, the trading volume for LargeCap and MidCap stocks transacted during the CAS has experienced steady growth, with the percentage of volume accounting for more than 8% by June 2018. The CAS draws volume mostly from the end of the continuous trading session, with the last 15-minute interval (15:45-16:00) contributing the largest volume migration. On the other hand, the decline in volume in the rest of the continuous session is very small. To address our main research question, we examine the effect of CAS on a variety of market liquidity and price efficiency measures. Regarding the impact of CAS on market liquidity, we find that the introduction of the close auction results in a slight decline in liquidity during the continuous trading session, with the reduction of liquidity most pronounced in the last 15-minute interval, as evidenced by a wider bid-ask spread and lower depth. However, the price impact (defined as the absolute return divided by the trading volume) in the last 15-minute decreases significantly. Regarding the impact of CAS on price efficiency, if the uninformed traders migrate to the close auction from the daily session, we expect a temporary price pressure near the close of the daily session to fall and a weaker subsequent price reversal. Using the return reversals observed subsequent to the end of the daily trading session, from the trading price at 16:00 to the trading price of the next day, we find that this is indeed the case. There is a general pattern of return reversal, but the magnitude of the reversal is smaller after the introduction of CAS. This indicates that price is more efficient after the implementation of CAS. The finding is in line with the evidence suggesting that passive funds shift from the continuous trading session to the closing auction session. These passive funds are incentivised to trade near the market close, as they are benchmarked against the index they track based on the closing price. Since these passive fund investors demand liquidity from the market, their migration to the closing auction session will lower liquidity in the last 15-minute period of the continuous trading session but can increase price efficiency at the market close. Overall, the introduction of CAS by HKEX is beneficial to many market participants who use the closing price as a reference price for the day-end settlement of many financial securities, such as mutual funds' NAV, the asset value of exchange-tr aded funds.

Property rights in the Crypto age: NFTs and the auctioning of limited edition artwork

Non-fungible tokens (NFTs) on blockchains have recently emerged as a means of certifying the originality of digital properties, such as artwork. In this paper, we examine limited-edition auctions for the sale of digital artwork using NFTs. We study two types of limited-edition auctions that have been used in practice: the `silent' and `ranked' auctions. We argue that the silent limited-edition auction as currently used in NFT markets is a variant of the well-known discriminatory price auction. We derive the Bayesian Nash equilibrium of this auction, and show that it is revenue equivalent to a VCG auction. Our analysis suggests that bidding behavior in a silent limited-edition auction is more aggressive than a standard discriminatory price auction without editioning; consequently, equilibrium bids are higher in the former. We also study the generalized English auction as an outcome equivalent auction to the ranked limited-edition auction, and show that this does not have a truthful equilibrium. Finally, we examine the uniform-price auction as a potential alternative mechanism for conducting an auction with editioning, and establish the absence of a truthful equilibrium in this instance as well. Our paper represents one of the first attempts to formally model the allocation of property rights using auctions in the digital environment, which is at the forefront of current innovation.

Emergency Money: Lessons from the Paycheck Protection Program

The Paycheck Protection Program, or PPP, was huge. Between April 2020 and May 2021, it provided almost $800 billion to more than 11 million businesses—about a third of all U.S. businesses with 500 employees or fewer. The PPP was also flawed. Treasury and the Small Business Administration faced incomplete statutory instructions and a challenging tradeoff between speed and accuracy in distributing PPP funds. These flaws make the PPP a realistic and valuable case study; the PPP reveals tools that can be applied to similar distributions of emergency funds. One tool is back-end adjustments, meaning that funds are first distributed and then later it is decided whether recipients may keep the money. Another tool is distribution in descending order of necessity, meaning that the first recipients to receive funds are applicants that most clearly meet the criteria of the program. A fund can follow distribution in descending order of necessity to disburse all of its funds. This approach is similar to a descending price auction for the sale of bonds or a stock of goods. Disbursing amounts in descending order of necessity also allows a fund to collect information needed to improve future distribution policy.

CCP Auction Design

Central counterparties (CCPs) are systemically important. When a clearing member defaults, the CCP sells the defaulted portfolio to surviving members in an auction, and losses, if any, are partly absorbed by a cash pool prefunded by the surviving members. We propose a tractable auction model that incorporates this salient feature. We find that ``juniorization'' -- the CCP first uses prefunded cash of members who submit bad bids -- increases the auction price. Aggressive juniorization can push the auction price above the fair value and almost eliminate the need to use prefunded resources. Nonetheless, juniorization generates heterogeneous impact on members of different sizes.

The Paternity Test and Effect of Environmental on the Calf Auction Price

The Paternity Test and Effect of Environmental on the Calf Auction Price