Abstract
Auctions are probably the most important mechanism for dynamic pricing in electronic commerce. Although they constitute a very old mechanism as well, the new popularity has raisen a lot of questions on the appropriate design of an auction mechanism for a particular situation. This chapter describes reasons for auction popularity by setting them into the context of trends in electronic commerce. We then illustrate the main issues in auction design. Our analysis starts with simple single-item auctions, as we can see them in many B2C markets. We then look at the more complex auction designs, which are necessary for B2B markets. For the latter design has to take into account that buyers want to purchase collections of items and services, and that the valuation for winning collections is not simply equal to the sum of valuations of single items. We show how multi-item auction mechanisms can benefit from a synthesis of microeconomic and mathematical optimization models.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Similar content being viewed by others
References
Agorics Inc. (1996) Auctions — going, going, gone. A survey of auction types. Agorics Inc., Los Altos, CA. Available at http://www.agorics.com/new.html (11.12.2000)
Barun Sarkar, M., Butler, B., Steinfield, C. (1998) Intermediaries and Cybermediaries: A Continuing Role for Mediating Players in the Electronic Marketplace. JCMC 1(3). Available at http://www.ascusc.org/jcmclvoll/issue3/sarkar.html (11.12.2000)
Bikchandani S., Ostroy, J. M. (2000) The package assignment model. Working paper. An earlier version is available at http://www.cramton.umd.edu/conference/auctionconference. html (11.12.2000)
Brewer, P. J. (1999) Decentralized computation procurement and computational robustness in a smart market. Economic Theory 13: 41–92
Caplice, C. G. (1996) An Optimisation Based Bidding Process: A New Framework for Shipper-Carrier Relationships. Thesis, Department of Civil and Environmental Engineering, School of Engineering, MIT
Clarke, E. H. (1971) Multipart pricing of public goods. Public Choice 11: 17–33
Felsner, F., Müller, R., Wernisch, L. (1997) Trapezoid Graphs and Generalizations, Geomety and Algorithms. Discrete Applied Mathematics 74: 13–32
Fujishima, Y., Leyton-Brown, K., Shoham, Y. (1999) Taming the computational complexity of combinatorial auctions: Optimal and approximate approaches. In: Proceedings of IJCAI’99, Stockholm, Schweden. Morgan Kaufmann. Available at http://robotics.stanford.edu/~kevinlb/(11.12.2000)
Groves, T. (1973) Incentives in teams. Econometrica 41: 617–631
Herschlag, M., Zwick R. (2000) Internet Auctions-a popular and professional literature review. Quarterly J Electronic Commerce 1(2): 161–186. Available athttp://home.ust.hk/~mkzwick/download.html(11.12.2000)
Hoesel, S. van, Müller, R (2001) Optimization III Electronic Markets: Examples in Combinatorial Auctions. Netnomics 3: 23–33
Keil, J. M. (1992) On the complexity of scheduling tasks with discrete starting times. Operations Research Letters 12: 293–295
Kennanvision.com (1998) Exchange in the Internet Economy. The Keenan Report No. 1. Available at http://www.keenanvision.com (11.12.2000)
Klemperer, P. (1999) Auction Theory-A Guide to the Literature. J Economic Surveys 13(3): 227–286. Available at http://hicks.nuff.ox.ac.uk/economics/people/klemperer.htm (11.12.2000)
Lehmann, D., O’Cailaghan, L. I., Y. Shoham, Y. (1999) Truth Revelation in Rapid, Approximately, Efficient Combinatorial Auctions. Working Paper, 1999
Leyton-Brown, K., Pearson, M., Shoham, Y. (2000a) Towards a Universal Test Suite for Combinatorial Auctions. Proceedings of the 2000 ACM Conference on Electronic Commerce (EC’00). Available at http://robotics.stanford.edu/~kevinlb/(11.12.2000)
Leyton-Brown, K., Shoham, Y., Tennenholtz, M. (2000b) An algorithm for multi-unit combinatorial auctions. Proceedings of National Conference on Artificial Intelligence (AAAI), Austin, TX, July 31-August 2. Available at http:// robotics.stanford.edu/~kevinlb/(11.12.2000)
McMillan, J. (1994) Selling Spectrum rights. J Economic Perspectives 8(3): 145–162
Monderer, D., Tennenholtz, M. (1998) Optimal Auctions Revisited. In: Proceedings of AAAI- 98
Müller, R., Schulz, A. (2000) Combinatorial Auctions from a computational perspective. Working paper, available from the authors
Myerson, R. B. (1979) Incentive Compatibility and the Bargaining Problem. Econometrica 47:61–73
Myerson, R. B. (1981) Optimal Auction Design. Mathematics of Operations Research 6(1): 58–73
Nisan, N. (2000) Bidding and Allocation in Combinatorial Auctions. In: Proceedings of the ACM Conference on Electronic Commerce (EC-00). Available at http://www.cs.huji.ac.il/~noam/ (11.12.2000)
Nisan, N., Ronen, A. (2000) Computationally Feasible VCG Mechanisms, in -. Available at http://www.cs.huji.ac.ill~noam/ (11.12.2000)
Ockenfels, A., Roth, A. (2000) Late Minute Bidding and the Rules for Ending Second-Price Auctions: Theory and Evidence from a Natural Experiment on the Internet. Working Paper, Harvard University. Available at http://www.uni-magdeburg.de/vwI3/axel.html (11.12.2000)
Parkes, D. C., Ungar, L. H. (2000) Iterative Combinatorial Auctions: Theory and Practice. In: Proceedings of AAAI-00.
Parkes, D. C., Ungar, L. H., Foster, D. P. (1999) Accounting for Cognitive Costs in On-line Auction Design. In: Noriega, P., Sierra, C. (eds.) Agent Mediated Electronic Commerce (LNAI 1571). Springer, LNAI 1571, pp. 25–40
Rassenti S. J., Smith V. L., Bulfin R. L. (1982) A combinatorial auction mechanism for airport time slot allocation. Bell J Economis 13(2): 402–417
Rothkopf, M. H., Pekec, A., Harstad, R. M. (1998) Computationally manageable combinatorial auctions. Management Science 44(8): 1131–1147
Sandholm, T. (2000) Approaches to Winner Determination in Combinatorial Auctions. Decision Support Systems 28(1-2): 165–176
Sandholm, T., Suri, S. (2000) Improved Algorithms for Optimal Winner Determination in Combinatorial Auctions and Generalizations. Proceedings of National Conference on Artificial Intelligence (AAAI), Austin, TX, July 31-August 2, pp. 90–97
Scott, J. (2000) Emerging Patterns from the Dynamic Capabilities ofInternet Intermediaries, JCMC 5(3). Available at http://www.ascusc.org/jcmclvoI5/issue3/scott.html (11. 12.2000)
Skiena, S. S. (1998) The Algorithm Design Manual. Springer, The Electronic Library of Science Series
Tennenholtz, M. (2000) Some tractable combinatorial auctions. Proceedings of National Conference on Artificial Intelligence (AAAI), Austin, TX, July 31-August 2
Vickrey, W. S. (1961) Counterspeculation, auctions and competitive sealed tenders. J Finance 16: 8–37
Vohra R., Vries, S. de, Combinatorial auctions — a survey. Working paper, 2000. Available at http://www.kellogg.nwu.edu/faculry/vohra/htmlres.htm (11.12.2000)
Wellman, M., Walsh, W., Wurman, P., MacKie-Mason J. (1998) Auction protocols for decentralized scheduling. Proceedings of the 18th International Conference on Distributed Computing Systems.
Wolfstetter, E. (1996) Auctions: An introduction. J. Economic Surveys 10: 367–421
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2001 Springer-Verlag Wien
About this chapter
Cite this chapter
Müller, R. (2001). Auctions — the Big Winner Among Trading Mechanisms for the Internet Economy. In: Werthner, H., Bichler, M. (eds) Lectures in E-Commerce. Springer, Vienna. https://doi.org/10.1007/978-3-7091-6213-2_6
Download citation
DOI: https://doi.org/10.1007/978-3-7091-6213-2_6
Publisher Name: Springer, Vienna
Print ISBN: 978-3-211-83623-1
Online ISBN: 978-3-7091-6213-2
eBook Packages: Springer Book Archive