Design of online auctions: Proxy versus non-proxy settings

作者：Cai Gangshu; Chen Ying Ju^*; Gong Xiting

来源：Decision Support Systems, 2012, 52(2): 384-394.

DOI：10.1016/j.dss.2011.09.005

• e-Commerce
• Sequential auctions
• Proxy bidding
• Traffic congestion

Recent years have witnessed the rapid development of online auctions. Currently, some online auctions, such as eBay, introduce a proxy bidding policy, under which bidders submit their maximum bids and delegate to a proxy agent to automatically outbid other competitors for the top bidder, whereas other online auctions do not. This paper compares these two widely used auction mechanisms (proxy setting and non-proxy setting) and characterizes the equilibrium bidding behavior and the seller%26apos;s expected revenue. We find the proxy auction outperforms the non-proxy auction in terms of the seller%26apos;s expected revenue. This dominance result is not prone to the specific bid announcement policy, the bidder%26apos;s knowledge regarding the number of bidders, the impact of traffic congestion along the bidding process, the number of items sold through the auction, and the existence of a reserve price. %26lt;br%26gt;We further find that the proxy setting usually fails to sustain the truthful bidding as a dominant strategy equilibrium even if no minimum bid increments are adopted, and the possibility of a low-valuation-bidder dilemma where the low-valuation bidders could be better off if all bidders collude to bid at the last minute. We also discuss the dramatically different equilibrium bidding behaviors under the two auction mechanisms.

• 出版日期2012-1