On Simultaneous Online Auctions with Partial Substitutes

Millions of online electronic auctions on the Internet today are being conducted as isolated auctions, leading to ineÆcient outcomes. We argue that if the independent ascending auctions of substitutes (similar items) are made simultaneous and agents are provided to the customers to bid across a number of these auctions, then the resulting system has several desirable properties. In particular, we show under very general conditions, that if the agents follow a simple truth telling greedy bidding strategy (which we call LGB), then a Nash equilibrium results which not only maximizes the total surplus of the system but also distributes it fairly among the bidders and the sellers through nearly unique competitive prices. We discuss the implications of our results for the design of online auctions on the Internet.