English Auction Research Articles

The English Auction Method for Scheduling Jobs in a Distributed Network of Supercomputer Centers

The article describes the problem of scheduling jobs with absolute priorities in a geographically distributed network of supercomputer centers (GDN). In this case English auction method can be efficiently applied. Classic market model considers computational resources as the goods (subject of auction trades), and resources’ owners act as sellers. Users act as buyers who participate in the auction on purpose to purchase computing resources for the execution of their jobs. This model assumes that customers have certain budgets in nominal or real money. The priority of the job is actually determined by the price, which the user can pay to finish the job by a certain time. The GDN model investigated by the authors differs from the known ones in that the jobs priorities are absolute and assigned according to uniform rules. The main goal is the earliest execution of high-priority jobs. In this case, the concept of the user’s budget becomes meaningless, and the classic auction models do not work. The authors propose a new approach where the jobs act as the goods and buyers are resource owners who paying for jobs with available idle supercomputing resources. For this approach, the authors investigate the features and characteristics of English auction, as the most preferred method for scheduling jobs with absolute priorities in GDN.

Efficient ex post implementable auctions and English auctions for bidders with non-quasilinear preferences

We study efficient auction design for a single indivisible object when bidders have interdependent values and non-quasilinear preferences. Instead of quasilinearity, we assume only that bidders have positive wealth effects. Our setting nests cases where bidders are ex ante asymmetric, face financial constraints, are risk averse, and/or face ensuing risk. We give necessary and sufficient conditions for the existence of an ex post implementable and (ex post Pareto) efficient mechanism. These conditions differ between the standard case where the auctioneer is a seller and when the auctioneer is a buyer (a procurement auction).When the auctioneer is a seller, there is an efficient ex post implementable mechanism if there is an efficient ex post implementable mechanism in a corresponding quasilinear setting. This result extends established results on efficient ex post equilibria of English auctions with quasilinearity to our non-quasilinear setting. Yet, in the procurement setting there is no mechanism that has an efficient ex post equilibrium if the level of interdependence between bidders is sufficiently strong. This result holds even if bidder costs satisfy standard single crossing conditions that are sufficient for efficient ex post implementation in the quasilinear setting.

How obvious is the dominant strategy in an English Auction? Experimental evidence

ABSTRACT Bidding one's value is a weakly dominant strategy (DS) in both English and second-price auctions (SPAs) with private values, but experimental studies find frequent and systematic deviations from the DS only in the latter. To explain the difference, Li (2017) proposes a stronger solution concept, obviously dominant strategies (ODS), that is present in English auctions but not SPAs. We introduce a treatment to English auctions that affects expected payoffs but not the DS. We observe little change in bidding in response to the manipulation in English auctions where the DS is also an ODS, whereas this manipulation has been shown to drastically affect bidding in SPAs (Georganas et al., 2017) where the DS is not an ODS.

Dynamic Communication Mechanism Design

This paper considers dynamic communication mechanisms in a quasi-linear single-value environment. The mechanism designer gradually identifies agents’ valuations by iteratively offering prices to agents at different stages. Agents pay the maximum price they accepted if their desirable decision is made. We show that sincere reporting is an ex post equilibrium if and only if a communication mechanism is a monotone-price mechanism. English auctions are essentially unique mechanisms that satisfy ex post incentive compatibility and efficiency. When sincere reporting is not an equilibrium, an allocation rule is implemented in a subgame perfect Nash equilibrium under a certain condition. The efficient allocation rule is implemented regardless of details of a communication process.

Cartel Stability in Experimental Auctions

Using laboratory experiments, we compare the stability of bidding rings in the English auction and the first-price sealed-bid auction in a heterogeneous-value setting. In both a re-matching condition and a fixed-matching condition, we observe that biddings rings are more stable in the English auction than in the first-price sealed-bid auction. In both conditions, the first-price sealed-bid auction dominates the English auction in terms of average revenue and the revenue spread. The English auction outperforms the first-price sealed-bid auction in terms of efficiency.

Solving a dynamic combinatorial auctions problem by a hybrid metaheuristic based on a fuzzy dominance relation

This paper introduces a bi-objective winner determination problem which is based on English auctions. Most models of combinatorial auctions (winner determination problem) do not allow the bidder to update his offer, due to the fact that these mechanisms are static. However in reality bidders are in rough competition while there is time for auction. In this work we give a mathematical formulation of the dynamic model of the bi-objective winner determination problem, where the objectives are: (i) maximization of the total income, (ii) maximization of the number of items sold. This problem is based on the English auction mechanism, which allows bidders to renew their bids until the end of the exercise period. Then the solution is proposed by giving an algorithm based on an hybridization of a metaheuristic with a fuzzy dominance relation. A numerical experimentation using this algorithm on simulated data gives rise to satisfactory results.

Countering the Winner’s Curse: Optimal Auction Design in a Common Value Model

We characterize revenue maximizing mechanisms in a common value environment where the value of the object is equal to the highest of bidders' independent signals. The optimal mechanism exhibits either neutral selection, wherein the object is randomly allocated at a price that all bidders are willing to pay, or advantageous selection, wherein the object is allocated with higher probability to bidders with lower signals. If neutral selection is optimal, then the object is sold with probability one by a deterministic posted price. If advantageous selection is optimal, the object is sold with probability less than one at a random price. By contrast, standard auctions that allocate to the bidder with the highest signal (e.g., the first-price, second-price or English auctions) deliver lower revenue because of the adverse selection generated by the allocation rule: if a bidder wins the good, then he revises his expectation of its value downward. We further show that the posted price mechanism is optimal among those mechanisms that always allocate the good. A sufficient condition for the posted price to be optimal among all mechanisms is that there is at least one potential bidder who is omitted from the auction. Our qualitative results extend to more general common value environments where adverse selection is high.

Incomplete Contracts in Dynamic Procurement

We analyze the problem of a buyer who purchases a long-term project from one of several suppliers. A changing state of the world influences the costs of the suppliers. Complete contracts conditioning on all future realizations of the state are infeasible. We show that contractual incompleteness comes without a cost. The buyer achieves the same surplus with complete and incomplete contracts. The key insight is that the allocation prescribed by optimal complete contracts is sequentially optimal with incomplete contracts if the buyer does not receive too much information ex-interim. We show that the English auction restricts the information optimally.

An Auction Approach for Cost and Schedule Management of IT Outsourcing Project

Cost and schedule management are important issues in an information technology outsourcing project. Generally, a client does not know much about market quotation and ability of vendors. Thus, an efficient approach should select a suitable vendor for the project with balanced cost and schedule. In this study, an improved standard English auction (ISEA) is designed, in which the multi-attribute situation is considered, and multi-attribute utility theory (MAUT) is introduced. A new auction protocol and a utility increment function are proposed, respectively. Finally, numerical examples are designed to demonstrate the auction process and its operation. Some insights are found: The ISEA is competent to describe the cost and schedule management process in an auction approach. The optimal incremental utility for client and vendor are found, and the proposed auction protocol is a mechanism for the client and vendor to obtain win–win results. The completely consistent results can be obtained from different size cases, which indicates that the validity of the designed auction mechanism and the effect of the utility increase function on the negotiation results.

Divergence in Reservation Prices and Its Impact on Housing Market Liquidity: A Theoretical Analysis

In this paper, we build a two-period English auction model to study the relative movements between buyers’ and sellers’ reservation prices in the housing market. We show that changes in sellers’ reservation prices are jointly determined by changes in buyers’ reservation prices, probability of buyers offering a high or low price, and the arrival rate of buyers. When the divergence between the buyers’ and sellers’ reservation prices widens, the probability of sale increases in the upward market and decreases in the downward market, contributing to the increases or decreases in market liquidity.

Limited Liability and High Bids in English Auctions

Abstract In this paper, we investigate how limited liability affects firms’ bidding behavior in license auctions. We focus on a model where firms first seek financing from banks, then bid for the licenses, and the winning firms set prices in a product market with uncertain demand. In a model of one license, the winning firm becomes a monopoly. A higher bid induces a higher product price. In a model of two licenses, a higher bid provides a positive externality to all other firms. In both models, bids are extremely high in the English auction, and the English auction always generates more revenue than the first-price/discriminatory auction.

Bidding Behavior in the Housing Market under Different Market Regimes

The aim of this paper is to investigate whether different market regimes affect bidding behavior in housing auctions. Taking advantage of special circumstances in the Norwegian housing market in 2015 and 2016, we conduct a survey involving 1803 respondents in three of Norway’s largest cities, Oslo, Stavanger and Trondheim. In the Norwegian housing market 90 percent of dwellings are sold after an English auction. Norway has a rather homogeneous market, with the same laws, traditions, interest rates and approximately the same tax rates applying across the country. However, in December 2016, the two-year nominal house price increase was 34.8 percent in Oslo and 14.8 percent in Trondheim, whereas prices fell 7.8 percent over the same period in Stavanger. We find that households in booming housing markets appear to believe that a more aggressive bidding strategy is advisable to obtain a dwelling at the lowest possible price, compared with households in bust markets. Evidence suggesting that bidders in booming markets are less likely to decide on a maximum price limit before an auction commences substantiates this finding. In addition, we find that bidders in booming markets have a weaker reliance on real estate agents.

Revenue Guarantee Equivalence

We revisit the revenue comparison of standard auction formats, including first-price, second-price, and English auctions. We rank auctions according to their revenue guarantees, i.e., the greatest lower bound of revenue across all informational environments, where we hold fixed the distribution of bidders' values. We conclude that if we restrict attention to the symmetric affiliated models of Milgrom and Weber (1982) and monotonic pure-strategy equilibria, first-price, second-price, and English auctions all have the same revenue guarantee, which is equal to that of the first-price auction as characterized by Bergemann, Brooks, and Morris (2017a). If we consider all equilibria or if we allow more general models of information, then first-price auctions have a greater revenue guarantee than all other auctions considered.

English auctions with ensuing risks and heterogeneous bidders

We establish conditions under which an English auction for an indivisible risky asset has an efficient ex post equilibrium when the bidders are heterogeneous in both their exposures to, and their attitudes toward, the ensuing risk the asset will generate for the winning bidder. Each bidder’s privately known type may affect both his risk attitude and the expected value of the asset’s return to the winner. An ex post equilibrium in which the winning bidder has the largest willingness to pay for the asset exists if two conditions hold: each bidder’s marginal utility of income is log-supermodular, and the vector-valued function mapping the type vector into the bidders’ expected values for the asset satisfies a weighted average crossing condition. However, this equilibrium need not be efficient. We show that it is efficient if each bidder’s expected value for the asset is nonincreasing in the types of the other bidders, or if the bidders exhibit nonincreasing absolute risk aversion, or if the asset is riskless.

Complements and substitutes in sequential auctions: the case of water auctions

AbstractWe use data on sequential water auctions to estimate demand when units are complements or substitutes. A sequential English auction model determines the estimating structural equations. When units are complements, one bidder wins all units by paying a high price for the first unit, thus deterring others from bidding on subsequent units. When units are substitutes, different bidders win the units with positive probability, paying prices similar in magnitude. We recover individual demand consistent with this stark pattern of outcomes and confirm it is not collusive but consistent with noncooperative behavior. Demand estimates are biased if one ignores these features.

Symmetric Auctions: Finding Numerical Solutions by using Auction Solver

This essay theoretically investigates symmetric types of auctions and provides simulation for the different types of statistical distributions that bidders follow in order to determine the maximum bid, Expected revenue for the auctioneer, Expected payment by bidders, Expected utility of the bidders, probability that item is unallocated. In addition, the subject of interest of this paper are three types of auctions: FPA (first price auction, Dutch type, SPA (Second price auction, English auction, Vickrey auction), APA (all-pay auctions).

English Versus Vickrey Auctions with Loss Averse Bidders

Evidence suggests that people evaluate outcomes relative to expectations. I analyze this expectation-based loss aversion in the context of dynamic and static auctions, where the reference point is given by the (endogenous) equilibrium outcome. If agents update their reference point during the auction, the arrival of information crucially affects equilibrium behavior. Consequently, I show that - even with independent private values - the Vickrey auction yields strictly higher revenue than the English auction, violating the well known revenue equivalence.

Multiparty Quantum English Auction Scheme Using Single Photons as Message Carrier

In this paper, a secure and economic multiparty english auction protocol using the single photons as message carrier of bids is proposed. In order to achieve unconditional security, fairness, undeniability and so on, we adopt the decoy photon checking technique and quantum encryption algorithm. Analysis result shows that our protocol satisfies all the characteristics of traditional english auction, meanwhile, it can resist malicious attacks.

Sequential rules for house allocation with price restrictions

This paper considers a housing market with price restrictions. On such market, price equilibrium may be excluded for certain preference profiles. However, the existence of a unique minimal rationing price equilibrium has previously been established on a general preference domain that contains “almost all” preference profiles. This type of equilibrium has been demonstrated to be an important ingredient in a direct and strategy-proof allocation mechanism for housing markets with price restrictions. The main contribution of this paper is to provide a finite ascending price sequence that terminates to a minimal rationing price equilibrium. This sequence is demonstrated to play a key-role in an Iterative English Auction Rule for housing markets with price restrictions.

Does suspending an English Auction increase revenues?

This study is motivated by the observation that sellers in Australia often suspend housing auctions under a questionable pretense. We conjecture that this practice is observed since the suspension leads to a quasi-endowment effect, which increases revenues. We conducted English auctions with and without stoppages for a real good in the laboratory. Unexpectedly, we observe similar auction prices across treatments. A deeper exploration shows that the subjects who held the highest bids during the suspension won less frequently in the suspension treatment than their counterparts in the control treatment. We infer that there must be two canceling opposite effects, a cooling-off effect for the currently highest bidder and a heating-up effect for the other, taking place during the suspension.