Replicating Online Yankee Auctions to Analyze Auctioneers' and Bidders' Strategies

Bapna, Ravi; Goes, Paulo; Gupta, Alok
September 2003
Information Systems Research;Sep2003, Vol. 14 Issue 3, p244
Academic Journal
We present a simulation approach that provides a relatively risk-free and cost-effective environment to examine the decision space for both bid takers and bid makers in web-based dynamic price setting processes. The applicability of the simulation platform is demonstrated for Yankee auctions in particular. We focus on the optimization of bid takers' revenue, as well as on examining the welfare implications of a range of consumer-bidding strategies--some observed, some hypothetical. While these progressive open discriminatory multi-unit auctions with discrete bid increments are made feasible by Internet technologies, little is known about their structural characteristics, or their allocative efficiency. The multi-unit and discrete nature of these mechanisms renders the traditional analytic framework of game theory intractable (Nautz and Wolfstetter 1997). The simulation is based on theoretical revenue generating properties of these auctions. We use empirical data from real online auctions to instantiate the simulation's parameters. For example, the bidding strategies of the bidders are specified based on three broad bidding strategies observed in real online auctions. The validity of the simulation model is established and subsequently the simulation model is configured to change the values of key control factors, such as the bid increment. Our analysis indicates that the auctioneers are, most of the time, far away from the optimal choice of bid increment, resulting in substantial losses in a market with already tight margins. The simulation tool provides a test bed for jointly exploring the combinatorial space of design choices made by the auctioneer's and the bidding strategies adopted by the bidders. For instance, a multinomial logit model reveals that endogenous factors, such as the bid increment and the absolute magnitude of the...


Related Articles

  • LEAST AND UNIQUE PRICE AUCTION WITH ASCENDING SLICES (LUP-AS): PLAYING GAME STYLE ONLINE- AUCTION. OTAIR, MOHAMMED // Journal of Theoretical & Applied Information Technology;Aug2015, Vol. 78 Issue 3, p386 

    In last two decades, Online (Web) auctions and its types took a lot of attention by researchers and business corporates. The main problem in many auction types is the fixed-closing time, which causes a phenomenon called "sniping" (i.e. submitting a bid at the final moments by one of the...

  • Auction sites are a popular choice for products both old and new. RISK, RALPH // New Media Age;4/29/2010, p07 

    The article reports on the bid of 64% of British respondents in online auctions and the 74% increase in the number of 18-34-year-old bidders, based on a survey of auction sites.

  • Anatomy of an online auction. Bechman, Tom J. // Prairie Farmer;Mar2011, p48 

    In this article, the author discusses the basics of online auction and how the trend of Internet bidders have increased.

  • Slow Dutch Auctions. Carare, Octavian; Rothkopf, Michael // Management Science;Mar2005, Vol. 51 Issue 3, p365 

    Theorists have long believed that Dutch auctions are strategically equivalent to standard sealed bidding. However, in recent controlled experiments with actual Dutch and sealed-bid Internet auctions of collectibles, the Dutch auctions produced significantly more revenue. We believe that this...

  • Auctions with shill bidding. Chakraborty, Indranil; Kosmopoulou, Georgia // Economic Theory;Aug2004, Vol. 24 Issue 2, p271 

    Summary. Shill bidding has increased substantially in recent years since the technology employed to conduct on-line auctions enables many sellers to disguise their identities and bid. Although their intent is to gain by misleading the bidders on the value of the object, we show that in a common...

  • DETERMINANTS OF ONLINE AUCTION SUCCESS. Jianwei Hou // Review of Business Research;2012, Vol. 12 Issue 5, p58 

    Many online auctions fail to attract bidders, thus not leading to an eventual sale. The purpose of this study is to investigate a variety of factors that may determine the likelihood of a sale for online auctions. Specifically, this study examines two types of factors: seller reputation and...

  • The highest bid wins an education.  // Christian Science Monitor;10/5/99, Vol. 91 Issue 217, p13 

    Focuses on the internet Web site `eCollegebid.org' that treats college tuition like an auction, matching students' financial bids to colleges willing to offer discounted tuition rates.

  • Laptop model to cut auction costs. Jordan, Hannah // Third Sector;6/25/2008, p7 

    The article reports on the launch by auction website Buy Once Give Twice of a new service wherein supporters will be given laptops or handheld devices to register their bids. Taking its fee as a percentage of the amount raised, the group will provide charities with laptops and other equipment...

  • Online ag auction site draws bidders. Vogt, Willie // Kansas Farmer (0022-8583);Mar2011, Vol. 149 Issue 3, p77 

    The article focuses on the online agricultural auction offered by IronPlanet, an online construction and agriculture equipment auction site. According to Paul Blalock, who heads up the agriculture sales team, IronPlanet promotes a detailed inspection reports and the IronClad Assurance guarantee...


Read the Article


Sign out of this library

Other Topics