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COS 444 Internet Auctions: Theory and Practice

COS 444 Internet Auctions: Theory and Practice. Spring 2008 Ken Steiglitz ken@cs.princeton.edu. Praxis. Cassady on executing the (English) bid Book bids, anticipating eBay Mail-bid sales Buy-or-Bid sales (cf Buy-It-Now on eBay) Ticks (= increments).

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COS 444 Internet Auctions: Theory and Practice

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  1. COS 444 Internet Auctions:Theory and Practice Spring 2008 Ken Steiglitz ken@cs.princeton.edu

  2. Praxis • Cassady on executing the (English) bid • Book bids, anticipating eBay • Mail-bid sales • Buy-or-Bid sales (cf Buy-It-Now on eBay) • Ticks (= increments)

  3. Theory: the four basic auctions English weakly equivalent toVickrey Dutch strategically equivalent to FP

  4. Theory: truthful bidding • Truthful bidding is weakly dominant in Vickrey auctions • Truthful bidding is also weakly dominant in (Japanese button) English auctions, but not in ascending-price or outcry English auctions

  5. Theory: probability • pdf • cdf • Expectation

  6. Theory:probability • Almost universal assumption: range normalized to [0,1] • Common assumption for examples, etc., v ’s “uniformly distributed on[0,1]” , which means f (x ) = 1 , F (x ) = x and iid = “independently and identically distributed”

  7. Praxis • Disincentives to truthful bidding • Evolution of eBay from mail-bid sales (conceptually anyway) • The "California auction" as an abstraction • Other online closing rules, Amazon & Yahoo • Taobao, the Chinese online auction site?

  8. Theory: simplest RE • Back to n=2 bidders, uniform iid v ’s • E[pay] in SP, when bidders bid truthfully, is average second-price = 1/3 (to be proved shortly) • E[pay] in FP at equilibrium is • E[pay] in FP is average of this over v1=1/6 times 2 bidders = 1/3 … same as SP

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