Online Auction Markets

SINGH, RATNA. Design and Implementation of fauxBay: Test-Bed for Bidding Agents in Online Auction Markets. (Under the direction of Dr. Peter Wurman). Online auctions provide a very competitive market for a variety of goods and services and have gained a lot of popularity over the last few years. The increasing participation of buyers and sellers in these auctions has triggered the development of software bidding agents. These agents are automated agents that are designed to place bids on behalf of the user. In recent years, simulation of online auction markets has become a major research area in the field of electronic commerce. This is because testing different bidding strategies in a real auction environment involves risks and can result in heavy losses. Moreover, testing in a real life auction involves a substantial amount of time and participation, in order to derive a definite conclusion about the bidding agent’s performance. We propose to solve this problem by designing and implementing a tool for simulating online auctions. Our simulation tool called fauxBay can be configured to develop test scenarios for testing bidding agent strategies. Currently, fauxBay supports the reserve price auction mechanism found on eBay. However, support for other auction mechanisms can be easily integrated with fauxBay in the future. We have designed fauxBay to offer two modes of simulating auction environments for testing bidding strategies: event-based and clock-based. Eventbased simulation is used to obtain a quicker analysis of the bidding agent’s performance, by moving forward to each event rather than moving linearly by the clock. In contrast, the clock-based simulation offers to test and gauge a bidding agent’s performance in an auction environment where time moves linearly by the clock similar to real life online auctions. A key characteristic of fauxBay is that it tests bidding agent’s strategies against real eBay data on completed auctions. Therefore, the results obtained by testing bidding strategy in fauxBay give a better insight into its anticipated performance in a real life online auction. Overall, fauxBay is designed to be extensible, configurable and give close to realistic results on the performance of bidding agents. Design and Implementation of fauxBay: Test-Bed for Bidding Agents in Online Auction Markets

[1]  Elmar G. Wolfstetter,et al.  Low Price Equilibrium in Multi-Unit Auctions: The Gsm Spectrum Auction in Germany , 2001, SSRN Electronic Journal.

[2]  Alison King Chung Lo,et al.  Consumer Sequential Search: Not Enough or Too Much? , 2003 .

[3]  Yongmin Chen,et al.  Paid Placement: Advertising and Search on the Internet , 2006 .

[4]  Paul R. Milgrom,et al.  A theory of auctions and competitive bidding , 1982 .

[5]  Garud Iyengar,et al.  Characterizing Optimal Adword Auctions , 2006, ArXiv.

[6]  E. Maasland,et al.  Auction Theory , 2021, Springer Texts in Business and Economics.

[7]  Sandro Brusco,et al.  Simultaneous ascending auctions with complementarities and known budget constraints , 2009 .

[8]  Divyakant Agrawal,et al.  Duplicate detection in click streams , 2005, WWW '05.

[9]  David P. Williamson,et al.  An adaptive algorithm for selecting profitable keywords for search-based advertising services , 2006, EC '06.

[10]  Dale O. Stahl,et al.  Oligopolistic Pricing with Sequential Consumer Search , 1989 .

[11]  Sylvia Richardson,et al.  Markov chain concepts related to sampling algorithms , 1995 .

[12]  K. Judd.  Numerical methods in economics , 1998 .

[13]  Atanu R. Sinha,et al.  Auctions: Research Opportunities in Marketing , 2002 .

[14]  P. Cramton.  Money Out of Thin Air: The Nationwide Narrowband PCS Auction , 1995 .

[15]  Jose M. Vidal-Sanz,et al.  The value of a "free" customer , 2009 .

[16]  Harry J. Paarsch.  Deciding between the common and private value paradigms in empirical models of auctions , 1992 .

[17]  Nir Vulkan.  Economic Implications of Agent Technology and E-Commerce , 1999 .

[18]  Sunil Gupta,et al.  The Shopping Basket: A Model for Multicategory Purchase Incidence Decisions , 1999 .

[19]  G. Häubl,et al.  Preference Construction and Persistence in Digital Marketplaces: The Role of Electronic Recommendation Agents , 2003 .

[20]  K. Arrow,et al.  OPTIMAL ADVERTISING POLICY UNDER DYNAMIC CONDITIONS , 1962 .

[21]  Oliver J. Rutz,et al.  From Generic to Branded: A Model of Spillover Dynamics in Paid Search Advertising , 2008 .

[22]  Donald Steiner,et al.  FIPA: Foundation for Intelligent Physical Agents - Das aktuelle Schlagwort , 1998, Künstliche Intell..

[23]  Wendy W. Moe,et al.  The Influence of Goal‐Directed and Experiential Activities on Online Flow Experiences , 2003 .

[24]  David I. Laibson,et al.  Costly Information Acquisition: Experimental Analysis of a Boundedly Rational Model , 2006 .

[25]  Aries Wei Sun,et al.  Position Auction , 2008, Encyclopedia of Algorithms.

[26]  Jean-Pierre Dubé.  Multiple Discreteness and Product Differentiation: Demand for Carbonated Soft Drinks , 2004 .

[27]  Ali Hortaçsu,et al.  Winner's Curse, Reserve Prices and Endogenous Entry: Empirical Insights from Ebay Auctions , 2003 .

[28]  J. E. Russo,et al.  The Value of Unit Price Information , 1977 .

[29]  D. Ariely,et al.  Auction fever: The effect of opponents and quasi-endowment on product valuations , 2004 .

[30]  Kenneth E. Train,et al.  Discrete Choice Methods with Simulation , 2016 .

[31]  Benny Pinkas,et al.  On the Security of Pay-per-Click and Other Web Advertising Schemes , 1999, Comput. Networks.

[32]  T. Groves,et al.  Efficient Collective Choice when Compensation is Possible , 1979 .

[33]  John G. Lynch,et al.  Wine Online: Search Costs Affect Competition on Price, Quality, and Distribution , 2000 .

[34]  Zhenyu Liu,et al.  Analysis of User Web Traffic with A Focus on Search Activities , 2005, WebDB.

[35]  Timothy W. Finin,et al.  TAGA : Trading Agent Competition in Agentcities , 2003 .

[36]  Pradeep Chintagunta,et al.  Tipping and Concentration in Markets with Indirect Network Effects , 2008, Mark. Sci..

[37]  Ross A. Malaga.  The Value of Search Engine Optimization: An Action Research Project at a New E-Commerce Site , 2007, J. Electron. Commer. Organ..

[38]  John G. Lynch,et al.  Smart Agents: When Lower Search Costs for Quality Information Increase Price Sensitivity , 2003 .

[39]  Jean-Jacques Laffont,et al.  Structural Analysis of Auction Data , 1996 .

[40]  Eric T. Bradlow,et al.  The Little Engines That Could: Modeling the Performance of World Wide Web Search Engines , 2000 .

[41]  J. Rochet,et al.  Two-sided markets: a progress report , 2006 .

[42]  Amy Nicole Langville,et al.  Google's PageRank and beyond - the science of search engine rankings , 2006 .

[43]  W. Andrew,et al.  LO, and A. , 1988 .

[44]  Moshe Ben-Akiva,et al.  Discrete Choice Analysis: Theory and Application to Travel Demand , 1985 .

[45]  Eric J. Johnson,et al.  When Web Pages Influence Choice: Effects of Visual Primes on Experts and Novices , 2002 .

[46]  Martin Pesendorfer,et al.  Asymptotic Least Squares Estimators for Dynamic Games , 2008 .

[47]  Song Yao,et al.  A Dynamic Model of Sponsored Search Advertising , 2010, Mark. Sci..

[48]  G. Stigler.  The Economics of Information , 1961, Journal of Political Economy.

[49]  Q. Vuong,et al.  Optimal Nonparametric Estimation of First-price Auctions , 2000 .

[50]  Georgia Kosmopoulou,et al.  The Impact of Public Information on Bidding in Highway Procurement Auctions , 2007 .

[51]  Thorsten Joachims,et al.  Optimizing search engines using clickthrough data , 2002, KDD.

[52]  David J. Spiegelhalter,et al.  Hepatitis B: a case study in MCMC methods , 1996 .

[53]  David H. Reiley.  Field experiments on the effects of reserve prices in auctions: more Magic on the Internet , 2006 .

[54]  Atanu R. Sinha,et al.  Combining Buy-In Penalties with Commissions at Auction Houses , 1996 .

[55]  Oliver J. Rutz,et al.  A Model of Individual Keyword Performance in Paid Search Advertising , 2007 .

[56]  Bart J. Bronnenberg,et al.  Online Demand Under Limited Consumer Search , 2009, Mark. Sci..

[57]  Young-Hoon Park,et al.  Bayesian Estimation of Bid Sequences in Internet Auctions Using a Generalized Record Breaking Model , 2007 .

[58]  John G. Lynch,et al.  Interactive Home Shopping: Consumer, Retailer, and Manufacturer Incentives to Participate in Electronic Marketplaces , 1997 .

[59]  I. Hendel,et al.  Estimating Multiple-Discrete Choice Models: An Application to Computeri-Zzation Returns , 1994 .

[60]  G. Jin,et al.  Price, Quality and Reputation: Evidence from an Online Field Experiment , 2006 .

[61]  A. Barabasi,et al.  Emerging behavior in electronic bidding. , 2003, Physical review. E, Statistical, nonlinear, and soft matter physics.

[62]  F. Wolak,et al.  Structural Econometric Modeling: Rationales and Examples from Industrial Organization , 2004 .

[63]  Yi Zhu,et al.  Click Fraud , 2009, Mark. Sci..

[64]  A. Roth,et al.  Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet , 2002 .

[65]  R. Lal,et al.  When and How is the Internet Likely to Decrease Price Competition , 1999 .

[66]  D. Horsky,et al.  Advertising and the Diffusion of New Products , 1983 .

[67]  George J. Stigler,et al.  Information in the Labor Market , 1962, Journal of Political Economy.

[68]  Avi Goldfarb,et al.  Search Engine Advertising: Pricing Ads to Context , 2007 .

[69]  Pradeep K. Chintagunta,et al.  The Effect of Banner Advertising on Internet Purchasing , 2006 .

[70]  Sumit K. Majumdar,et al.  Wearout Effects of Different Advertising Themes: A Dynamic Bayesian Model of the Advertising-Sales Relationship , 2007 .

[71]  Daniel McFadden,et al.  Modelling the Choice of Residential Location , 1977 .

[72]  Stephen P. Ryan.  The Costs of Environmental Regulation in a Concentrated Industry , 2012 .

[73]  C. L. Benkard,et al.  Estimating Dynamic Models of Imperfect Competition , 2007 .

[74]  Y. Narahari,et al.  An Optimal Mechanism for Sponsored Search Auctions on the Web and Comparison With Other Mechanisms , 2009, IEEE Transactions on Automation Science and Engineering.

[75]  Carl F. Mela,et al.  E-Customization , 2003 .

[76]  D. Ariely,et al.  Buying, Bidding, Playing, or Competing? Value Assessment and Decision Dynamics in Online Auctions , 2003 .

[77]  Young-Hoon Park,et al.  Willingness to Pay and Competition in Online Auctions , 2007 .

[78]  Anindya Ghose,et al.  An Empirical Analysis of Search Engine Advertising: Sponsored Search in Electronic Markets , 2009, Manag. Sci..

[79]  Bernard Burg,et al.  Agentcities: Challenges and Deployment of Next- Generation Service Environments , 2002 .

[80]  Ali Hortaçsu,et al.  Product Differentiation, Search Costs, and Competition in the Mutual Fund Industry: A Case Study of S&P 500 Index Funds , 2003 .

[81]  Kannan Srinivasan,et al.  Modeling Online Browsing and Path Analysis Using Clickstream Data , 2004 .

[82]  Prasad A. Naik,et al.  Planning Media Schedules in the Presence of Dynamic Advertising Quality , 1998 .

[83]  Benjamin Edelman,et al.  Strategic bidder behavior in sponsored search auctions , 2007, Decis. Support Syst..

[84]  Carl F. Mela,et al.  Customer Channel Migration , 2008 .

[85]  André de Palma,et al.  Discrete Choice Theory of Product Differentiation , 1995 .

[86]  Sha Yang,et al.  Estimating Disaggregate Models using Aggregate Data through Augmentation of Individual Choice , 2007 .

[87]  Peter E. Rossi,et al.  Bayesian Statistics and Marketing , 2005 .

[88]  William Vickrey,et al.  Counterspeculation, Auctions, And Competitive Sealed Tenders , 1961 .

[89]  Han Hong,et al.  Nonparametric Tests for Common Values at First-Price Sealed-Bid Auctions , 2003 .

[90]  Stephen P. Ryan,et al.  NBER WORKING PAPER SERIES HETEROGENEITY AND THE DYNAMICS OF TECHNOLOGY ADOPTION , 2011 .

[91]  Stephen J. Rassenti,et al.  Auction Institutional Design: Theory and Behavior of Simultaneous Multiple Unit Generalizations of the Dutch and English Auctions , 1990 .

[92]  M. Weitzman.  Optimal search for the best alternative , 1978 .

[93]  Susan Athey,et al.  Identification of Standard Auction Models , 2000 .

[94]  Glenn Ellison,et al.  Lessons About Markets from the Internet , 2005 .

[95]  Carl F. Mela,et al.  Choice Models and Customer Relationship Management , 2005 .

[96]  Warren B. Powell,et al.  “Approximate dynamic programming: Solving the curses of dimensionality” by Warren B. Powell , 2007, Wiley Series in Probability and Statistics.

[97]  Tuomas Sandholm,et al.  eMediator: A Next Generation Electronic Commerce Server , 1999, AGENTS '00.

[98]  Song Yao,et al.  Online Auction Demand , 2008, Mark. Sci..

[99]  Gerald Häubl,et al.  Preference Construction and Persistence in Digital Marketplaces: The Role of Electronic Recommendation Agents , 2001 .

[100]  Catherine Tucker Stanford.  Empirically evaluating two-sided integrated network effects: The case of electronic payments∗ , 2004 .

[101]  Gary J. Russell,et al.  A Probabilistic Choice Model for Market Segmentation and Elasticity Structure , 1989 .

[102]  Y. Narahari,et al.  xxxxxxx An Optimal Mechanism for Sponsored Search Auctions and Comparison with Other Mechanisms , .

[103]  Eric T. Bradlow,et al.  Who's Got the Coupon? Estimating Consumer Preferences and Coupon Usage from Aggregate Information , 2008 .

[104]  Michael P. Wellman,et al.  The Michigan Internet AuctionBot: a configurable auction server for human and software agents , 1998, AGENTS '98.

[105]  Roberto Roson,et al.  Two-Sided Markets: A Tentative Survey , 2005 .

[106]  Catherine Wolfram.  Strategic Bidding in a Multiunit Auction: An Empirical Analysis of Bids to Supply Electricity in England and Wales , 1998 .

[107]  Chinya V. Ravishankar,et al.  Addressing Click Fraud in Content Delivery Systems , 2007, IEEE INFOCOM 2007 - 26th IEEE International Conference on Computer Communications.

[108]  Juan Feng.  Optimal mechanism for selling a set of commonly ranked objects , 2005 .

[109]  Susan Athey,et al.  Single Crossing Properties and the Existence of Pure Strategy Equilibria in Games of Incomplete Information , 1997 .

[110]  I. Perrigne,et al.  Asymmetry in Procurement Auctions: Evidence from Snow Removal Contracts , 2006 .

[111]  Bari A. Harlam,et al.  Modeling Consumers’ Choices of Multiple Items , 1995 .

[112]  Kevin F. Rock.  Why new issues are underpriced , 1986 .

[113]  Bart J. Bronnenberg.  Advertising Frequency Decisions in a Discrete Markov Process under a Budget Constraint , 1998 .

[114]  Susan Athey,et al.  Comparing Open and Sealed Bid Auctions: Theory and Evidence from Timber Auctions , 2004 .

[115]  Peter E. Rossi,et al.  The Value of Purchase History Data in Target Marketing , 1996 .

[116]  Scott A. Fay,et al.  An Empirical Study of the Impact of Nonlinear Shipping and Handling Fees on Purchase Incidence and Expenditure Decisions , 2006 .

[117]  W. Greene,et al.  计量经济分析 = Econometric analysis , 2009 .

[118]  B. Ratchford,et al.  Consumer information search revisited: Theory and empirical analysis , 1997 .

[119]  Anindya Ghose,et al.  An Empirical Analysis of Search Engine Advertising: Sponsored Search and Cross-Selling in Electronic Markets , 2007 .

[120]  H. Hong.  Increasing Competition and the Winner's Curse: Evidence from Procurement , 2002 .

[121]  M. Wedel,et al.  The Effectiveness of Customized Promotions in Online and Offline Stores , 2009 .

[122]  P. Reny.  On the Existence of Pure and Mixed Strategy Nash Equilibria in Discontinuous Games , 1999 .

[123]  Wilfred Amaldoss,et al.  Pricing of Conspicuous Goods: A Competitive Analysis of Social Effects , 2005 .

[124]  Han Hong,et al.  Using price distributions to estimate search costs , 2006 .

[125]  V. J. Hotz,et al.  Conditional Choice Probabilities and the Estimation of Dynamic Models , 1993 .

[126]  Martin Pesendorfer,et al.  Estimation of a Dynamic Auction Game , 2001 .

[127]  Eric T. Bradlow,et al.  An Integrated Model for Bidding Behavior in Internet Auctions: Whether, Who, When, and how Much , 2005 .

[128]  Q. Vuong,et al.  Semiparametric Estimation of First-Price Auctions with Risk Averse Bidders* , 2011 .

[129]  J. Goeree,et al.  Efficiency in auctions with Private and Common Values , 2002 .

[130]  Robert Zeithammer.  Forward-Looking Bidding in Online Auctions , 2005 .

[131]  John Rust.  Structural estimation of markov decision processes , 1986 .

[132]  Luís M. B. Cabral,et al.  The Dynamics of Seller Reputation: Evidence from Ebay , 2006 .

[133]  Glenn Ellison,et al.  Position Auctions with Consumer Search , 2007 .