Dutch Auction Research Articles

Dutch auction dynamics in non-fungible token (NFT) markets

Non-fungible tokens (NFTs) rose to prominence as a wide-scale implementation of blockchain technology to support the emergence of crypto-asset markets. These nascent digital markets raise questions about the behaviours of investors in the digital economy and their appetite for risk. Using 28,919 auction listings, 4937 sales, and 30,197 Telegram messages, we conduct a field study on the bidding and selling behaviours of NFT investors in a Dutch auction system. We reveal risk-seeking behaviours in our sample of Dutch auction sales. We document that time pressures and value propositions significantly influence NFT investors: fast clock speeds and greater price separations induce underbidding behaviours and are associated with low value retention for sellers. These results are confirmed using a matched-pairs analysis. Our study raises further questions on the risk preferences of investors in emergent digital marketplaces. We propose value maximisation strategies for marketplace developers and participants, while drawing attention to the presence of potentially exploitable biases and heuristics amongst participants, courtesy of bidding incentivisation schemes significantly altering how investors value NFTs.

How heuristic pricing shapes the aggregate market: the “Cheap Twin Paradox”

Abstract How do firms set prices when faced with an uncertain market? We study the pricing strategies of car dealers for used cars using online data and interviews. We find that 97% of 628 dealers employ an aspiration-level heuristic similar to a Dutch auction. Dealers adapt the parameters of the heuristic—initial price, duration, and change in price—to their local market conditions, such as number of competitors, population density, and GDP per capita. At the same time, the aggregate market is described by a model of equilibrium price dispersion. Unlike the equilibrium model, the heuristic correctly predicts systematic pricing characteristics such as high initial price, price stickiness, and the “cheap twin paradox.” We also find first evidence that heuristic pricing can generate higher profits given uncertainty than the equilibrium strategy.

Hidden in plain sight: Payoffs, probability, space, and time in isomorphic tasks

Highest stoppage games in economics—first price sealed bid auction and Dutch auction, among others—have produced striking puzzles, including violation of revenue equivalence between auctions and adjustment of behavior across interfaces. The latter is also observed in risk elicitation. Here, we use existing puzzles to shed light on each other, by nesting auction and risk tasks in a common environment. We find behavior consistent with a spatial interface imparting the same relevant auction-theoretic surplus and probability information as does an interactive numerical calculation tool. Empirical revenue equivalence (respectively, risky choice) can thus be altered by design.

Dutch Auction Dynamics in Non-fungible Token (NFT) Markets

Dutch Auction Dynamics in Non-fungible Token (NFT) Markets

The Effect of Posted Prices on Auction Prices: An Empirical Investigation of a Multichannel B2B Market

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

Application of Game Theory in Different Auction Forms

Auctions are employed in many areas all across the world. It is a key topic of study in game theory. This article primarily summarizes the winning strategies in auctions from a game theory perspective. To examine this issue, this paper reviews the past literature from three auction angles. The winning strategies applied in English auctions, Dutch auctions, and first-price auctions will differ depending on the form of auction. During a customary English auction, the winning strategy is to bid at their genius willingness. However, when multiple goods and deadlines are added to the auction, the winning strategy becomes to bid lower than the valuation. In Dutch auctions, bidders should bid at the beginning at a lower price. In first-price auctions, bidders should bid for all combinations when there are many items, and overbid when there is standard information feedback. This article is a review of previous relevant articles and provides references to related articles.

Electoral inequity

Ideally, a representative democracy awards a genuine vote to each adult. We study this issue in competitive democracies with an election model combining district apportionment and proportional representation. Four classic seat allocation rules, including d’Hondt, are reframed as Dutch auctions, allowing important properties to be easily derived. The pros and cons of these methods are stated in terms of economic inequality; Sainte Laguë’s is shown to best carry the genuine vote ideal, both for elections and for apportionment. We next expound the interplay between these two components in generating an inequitable treatment of voters and develop the scale-free index of inequity best fitted to their concern. We apply it to 40 countries for the apportionment of electoral districts. Lastly, we compute the same inequity index for recent parliamentary elections in 80 countries, finding that the majority system mistreats electors, thus putting a ‘price’ on government stability.

Diversity and characteristics of commercial Red Sea fish species based on fish market survey: informing management to reduce the risk of overfishing.

In small-scale fisheries (SSFs), where the sampling of many small boats and landing sites sometimes is not practical, fish market surveys represent an alternative way to obtain key fisheries data. This study analyses the diversity and characteristics of commercial Red Sea fish species landed in the Egyptian coast, including family, species-specific abundance, biomass, size and price by surveying the largest local fish market on the Egyptian Red Sea coast, over the course of a year (July 2021-June 2022) to also reflect any seasonality of these variables. Based on 53 survey visits, a total of 131,795 fish individuals, belonging to 111 species, and 22 families, were identified, recorded and measured. The analysis focused on the 60 most abundant species (104,420 individuals, 15 families). The surveys revealed that the most abundant families were Serranidae, Lethrinidae and Scaridae. Carangidae also was one of the most important families in terms of biomass. The most abundant species were Lethrinus mahsena, Sargocentron spiniferum and Lethrinus nebulosus. About 60% of revenue comes from the four families Serranidae, Lethrinidae, Scaridae and Lutjanidae. In terms of prices, the most expensive categories were species belonging to Serranidae, Lethrinidae and Lutjanidae families, such as Plectropomus pessuliferus marisrubri, Argyrops spinifer, L. nebulosus and Variola louti. The overall mean prices were higher in spring and summer months likely due to tourism flows. The mean size of many species, including the most valuable and abundant ones, is below the length of maturity. These results provide important benchmarks for monitoring future changes and shed important insights for fisheries management. Co-organised Dutch auctions would provide reliable data when combined with a strict monitoring effort to avoid any sale of the catch outside these official auctions. Other monitoring tools and methods are also recommended in the discussion.

Online Hybrid Dutch Auction with both private and common value components and counteracting overpayments

Auctions have been categorized exclusively as common value (CV) or private value (PV). Due to different cost structures of buyers and demand uncertainty, few studies would dispute that most real-world auctions have both elements. The well-designed online Hybrid Dutch Auction (HDA), with a transparent e-platform, can tackle collusion, overpayment, entry deterrence, and price discovery in public asset marketplaces.For the first time, this paper models a hybrid auction with both PV and CV components. We nest two auction theory paradigms for the HDA with a two-dimensional signal model and report a strategic analysis of equilibrium bidding behavior. The findings reveal that: (1) increased competition can mitigate the negative effect of uncertainty about the CV on revenue and bidding behavior; (2). Dynamic inconsistency benefits both parties. (3) Interestingly, the correct answer to the dilemma between attracting more buyers and gathering more information depends on the precision of the seller’s disclosed information.

Demand-Response Control in Smart Grids

In the smart grid, electricity price is a key element for all participants in the electric power industry. To meet the smart grid’s various goals, Demand-Response (DR) control aims to change the electricity consumption behavior of consumers based on dynamic pricing or financial benefits. DR methods are divided into centralized and distributed control based on the communication model. In centralized control, consumers communicate directly with the power company, without communicating among themselves. In distributed control, consumer interactions offer data to the power utility about overall consumption. Online auctions are distributed systems with several software agents working on behalf of human buyers and sellers. The coordination model chosen can have a substantial impact on the performance of these software agents. Based on the fair energy scheduling method, we examined Vickrey and Dutch auctions and coordination models in an electronic marketplace both analytically and empirically. The number of software agents and the number of messages exchanged between these agents were all essential indicators. For the simulation, GridSim was used, as it is an open-source software platform that includes capabilities for application composition, resource discovery information services, and interfaces for assigning applications to resources. We concluded that Dutch auctions are better than Vickrey auctions in a supply-driven world where there is an abundance of power. In terms of equity, Dutch auctions are more equitable than Vickrey auctions. This is because Dutch auctions allow all bidders to compete on an equal footing, with each bidder having the same opportunity to win the item at the lowest possible price. In contrast, Vickrey auctions can lead to outcomes that favor certain bidders over others, as bidders may submit bids that are higher than necessary to increase their chances of winning.

Level-k Reasoning and Biased Belief Updating in a Dutch Auction with Independent Private Values

Level-k Reasoning and Biased Belief Updating in a Dutch Auction with Independent Private Values

Enhancing Foreign Currency Allocation for Private Sector Development – Case of the Reserve Bank of Zimbabwe Forex Auction System

Foreign currency shortages remain a perennial challenge in Zimbabwe leading to several spillover effects such as shortages in electricity, raw materials, fuel, inflation among other market distortions. The central bank introduced the Dutch Auction system in an attempt to address forex shortages but the effectiveness of this approach has been questioned. This study employed the Vector Autoregressive (VAR) and error corrected (VECM) models in order to empirically determine how the Reserve Bank of Zimbabwe can efficiently allocate foreign currency in a manner which supports private sector development. In the short run, the auction is an effective tool to promote private sector development. However, long run analysis presents a deletions effect. This is due to a rise in round-tripping from market participants to leverage and perform arbitrage on different rates (auction and parallel), increased backlog reflecting shortages in allotments and high incidences of corruption. All this leads to a significant decrease in the confidence levels of the economy among private stakeholders. The study recommends monitoring of authorized auction dealers, improve public confidence by minimizing rent-seeking behavior, re-model exporters participation in the auction system or abandoning the auction system altogether.

Проблеми оцінки активів у процесі ліквідації банку

The aim of the article is to identify problematic issues of valuation of property (assets) of banks that are in the process of liquidation, and substantiate proposals for the desired solution, taking into account the need to protect the rights of bank creditors. Although the bankruptcy of banks causes significant economic and moral losses, the processes of removing insolvent banks from the market, their reorganization or liquidation are constantly taking place. Therefore, regulators and banks that have been declared insolvent face many questions, including the adequate valuation of banking assets and the determination of the liquidation estate. The article discusses approaches to asset valuation and features of their application in Ukrainian practice, as well as peculiarities of the sale of assets of banks in liquidation according to the Dutch auction model. It is noted that the imperfection of management of banks’ assets in the process of their functioning leads to discrepancies in the valuation of these low-quality assets in the liquidation procedure. It is determined that the ratio between the estimated value of assets and their book value for banks declared insolvent is on average 26.2 %, and the median value is 22.3 % This leads to a number of problems, including the inability of the Deposit Guarantee Fund (DGF) to ensure the repayment of part of the bank’s liabilities, which could be repaid in case of timely acceptance of tender offers at market value. It is noted that the most liquid assets, which are real estate and property, occupy an insignificant share in the structure of the liquidation mass – about 5 %, and the conversion rate in the sale of real estate quite often reaches 200 %. It is proposed, in accordance with European practice, to empower the Fund to monitor the assets of banks in the process of their functioning. The expediency of valuating assets not from the position of doing business «as usual» but from the point of view of the objective need to sell assets, focusing on the quick sale of assets at a market price, is emphasized. In order to improve the process of valuating the assets of an insolvent bank and focusing on the quick and transparent sale of the bank’s assets, it is proposed to implement the international experience of using loss-sharing agreements into domestic practice.

Dynamic Consistency in Ambiguous Dutch Auctions

Dynamic Consistency in Ambiguous Dutch Auctions

Dynamic restaurant reservation method using Scheduling Dutch Auction for addressing social distancing

Dynamic restaurant reservation method using Scheduling Dutch Auction for addressing social distancing

Do hybrid auctions always give “the best of both worlds” ? An illustration from asymmetric Anglo–Dutch auctions

Do hybrid auctions always give “the best of both worlds” ? An illustration from asymmetric Anglo–Dutch auctions

Buyers’ Strategic Behavior in B2B Multichannel Auction Markets: When an Online Posted Price Channel Is Incorporated into a Dutch Auction System

Firms are increasingly adopting different sales channels to reach new potential buyers. Yet, extant research has mainly focused on B2C online and offline posted price channels. B2B multichannel and, especially, systems with multiple pricing mechanisms are largely underexplored. This paper investigates the strategic behaviors of B2B buyers in a unique system where an online posted price channel is incorporated into a Dutch auction market. We follow buyers’ purchasing paths and examine conditions under which B2B buyers will use one or both channels. We incorporate learning and experience and demonstrate how buyers’ behaviors evolve. Our results, using an extensive data set from the world’s largest flower market, reveal that different from B2C buyers who purchase in small quantities with fewer strategic decisions involved, B2B buyers strategically choose and combine different price mechanisms based on not only their demand but also product portfolio diversity and experiences. Moreover, different from preoccupied concerns, the integration of an online posted price channel into a Dutch auction system can bring benefits to sellers without market disruptions.

Dutch vs. first-price auctions with expectations-based loss-averse bidders

We study Dutch and first-price auctions with expectations-based loss-averse bidders and show that the strategic equivalence between these formats no longer holds. Intuitively, as the Dutch auction unfolds, a bidder becomes more optimistic about her chances of winning; this stronger “attachment” effect pushes her to bid more aggressively than in the first-price auction. Thus, Dutch auctions raise more revenue than first-price ones. Indeed, the Dutch auction raises the most revenue among standard auction formats. Our results imply that dynamic mechanisms that make bidders more optimistic raise more revenue, thereby rationalizing the use of descending-price mechanisms by sellers in the field.

Applications of Game Theory in Microeconomics

Game theory has been used as a potent analytical tool by numerous areas since its inception. It has been more popular in microeconomic analysis in recent years. It is not an exaggeration to claim that it completely rewrites microeconomics. The major ideas of game theory are summarized in this paper, as well as their application in microeconomics. This study examines the three elements and key types of game theory in its fundamental material. The Nash equilibrium and other equilibria expanded by Nash equilibrium are then reviewed in game theory equilibrium. Then, the Cournot model, Stackelberg model, and Bertrand model are discussed in game theory and market analysis. Finally, in the section on game theory and auction, it explained that, within the context of the game, English auctions and second-price sealed-bid auctions should use comparable strategies, however Dutch auctions and first-price sealed-bid auctions should conceal their own valuations.

Emotional Differences between Isomorphic Auctions

First price and Dutch auctions are theoretically isomorphic, but previous experiments report that the institutions are not behaviorally isomorphic. This article uses facial analysis of video recordings of laboratory experiments to investigate whether these auctions invoke different emotional responses from bidders. The results indicate that bidders are angrier during the Dutch auction and that winners exhibit more contempt after the first price auction. Overall, subjects in both auctions appear to be mostly bored and depressed, but there is evidence that bidders exhibit more positive emotions as prices fall in the Dutch auction.