Auctions, Bidding and Exchange Design

Auctions have found widespread use in the last few years as a technique for supporting and automating negotiations on the Internet. For example, eBay now serves as a new selling channel for individuals, and small and big enterprises. Another use for auctions is for industrial procurement. In both these settings traditional auction mechanisms such as the English, Dutch, First (or Second) price Sealed-Bid auctions are now commonplace. These auctions types are useful for settings where there is a single unit of an item being bought/sold. However, since procurement problems are business-to-business they tend to be more complex and have led to the development and application of advanced auction types that allow for negotiations over multiple units of multiple items, and the configuration of the attributes of items. At the heart of auctions is the problem of decentralized resource allocation.