| Summary: | 碩士 === 國立臺灣大學 === 資訊管理學研究所 === 94 === Auctions, which account for an enormous volume of trading/transactions on the Internet, are a fundamental mechanism for automating price negotiations in electronic commerce. The recent growth in Internet auctions has opened a new window on bidding behavior in all kinds of auction mechanisms. Although they are so popular and widely used, there are still some challenges to be considered.
First, commodities in online auctions today are not as unique as those in traditional ones. As we know, the price of commodities is decided by the quantity of supply and demand in whole market. Consequently, it will stay in equilibrium and also each consumer can gain the product with the same price in the market. Since the mechanism of English auction is originally designed for unique-artifact bidding, it does not fit in the current online scenario. The mechanism of Dutch auction, on the other hand, allows bidding at the same price to deal with the trading of quantities of commodities. However, many online auctions are used to sell single unit of non-unique commodities, for which both English and Dutch auctions do not fit.
Second, automations of auctions, like proxy bidding, are not widely used in complicated auctions like Dutch ones. Therefore, the rule of that the earliest successful bids get the goods determines the winning bids; it causes great pressure to human bidders since timely bids are important. On the other hand, most online English auctions leverage proxy bidding to increase automations; however, it suffers the problem of last-minute-bidding if the proxy bidding mechanism is ill designed.
Finally, the problem of winner’s curse exits in online auctions. It is well-known that under information asymmetry, almost common-value auction mechanisms inherently exhibit a serious welfare problem known as the winner’s curse, stating that the winner of the auction always overbids. Although it can be resolved by minimizing bidding increments in English auctions, it is argued here that it can be eliminated completely by the mechanism of equal-price bidding in English auctions.
In short, we study how to design a strategy-proof mechanism for equal-price bidding. It demonstrates three advantages: First, bidders can demonstrate his bargaining power by staying at the same price. Second, proxy bidding is allowed without the problem of last-minute bidding. Third, winner’s curse is avoided since the winning bid needs not to be the highest bid.
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