Electronic Multidimensional Auctions and the Role of Information Feedback

* Part of this work was done while the first author was visiting the IBM T.J. Watson Research Center in Hawthorne, NY, whose hospitality is gratefully acknowledged. Anant Jhingran and Sunil Noronha and especially Mike Rothkopf provided valuable feedback on earlier versions. However, any remaining errors are solely the responsibility of the authors. AbstractTraditionally, companies aiming to achieve competition among suppliers have used sealed bidding procedures in their sourcing processes. The advances in information technology and in particular the Internet now allow these companies to use different and more complex auction mechanisms. In particular multidimensional auctions are a natural extension of the standard sealed-bid auctions, but these auctions raise a whole host of issues that have been little investigated. In this article we focus on one of these issues, namely the role of information feedback given during the auction process. We describe various feedback policies and analyze the expected impact on the performance of the auction mechanism using the criteria of speed of convergence, allocative efficiency and Pareto optimality. This can help both researchers and practitioners in a more detailed and thorough analysis of electronic auctions.