A probabilistic price mechanism design for online auctions

Recently, there is a rapid growth of the online auctions in e-commerce platforms, in which small and medium-sized enterprises (SMEs) heavily depend on the advertising systems. We need to design flexible price mechanisms to reduce the competition of SMEs without affecting competitive large companies. In this paper, a probabilistic price mechanism design approach is investigated for online auctions. Utilizing this approach, we first introduce simple mechanisms as a tool for designing new mechanisms. Based on a simple and a classical mechanism probabilistic price mechanisms are designed for online auctions and their properties are analysed. Furthermore, two mechanism design algorithms are suggested for different online auction scenarios. Experiments are presented to demonstrate the flexibility and the effictiveness of the proposed probabilistic mechanism design approach.

[1]  Roger B. Myerson,et al.  Optimal Auction Design , 1981, Math. Oper. Res..

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

[3]  Atila Abdulkadiroglu,et al.  RANDOM SERIAL DICTATORSHIP AND THE CORE FROM RANDOM ENDOWMENTS IN HOUSE ALLOCATION PROBLEMS , 1998 .

[4]  V. Krishna,et al.  Multiple-Object Auctions with Budget Constrained Bidders , 1998 .

[5]  Vincent Conitzer,et al.  Self-interested automated mechanism design and implications for optimal combinatorial auctions , 2004, EC '04.

[6]  Vincent Conitzer,et al.  Complexity of Mechanism Design , 2002, UAI.

[7]  Fuhito Kojima,et al.  Incentives in the probabilistic serial mechanism , 2010, J. Econ. Theory.

[8]  H. Varian.  Online Ad Auctions , 2009 .

[9]  E. H. Clarke.  Multipart pricing of public goods , 1971 .

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

[11]  Theodore Groves,et al.  Incentives in Teams , 1973 .

[12]  Hervé Moulin,et al.  A New Solution to the Random Assignment Problem , 2001, J. Econ. Theory.

[13]  Bernard J. Jansen,et al.  Sponsored search: an overview of the concept, history, and technology , 2008, Int. J. Electron. Bus..

[14]  S. Muthukrishnan,et al.  Internet Ad Auctions: Insights and Directions , 2008, ICALP.

[15]  Jie Zhang,et al.  A Discounted Trade Reduction Mechanism for Dynamic Ridesharing Pricing , 2016, IEEE Transactions on Intelligent Transportation Systems.

[16]  Jie Zhang,et al.  Dynamic dual adjustment of daily budgets and bids in sponsored search auctions , 2014, Decis. Support Syst..