Abstract
We consider competition between sellers offering similar items in concurrent online auctions, where each seller must set its individual auction parameters (such as the reserve price) in such a way as to attract buyers. We show that there exists a pure Nash equilibrium in the case of two sellers with asymmetric production costs. In addition, we show that, rather than setting a reserve price, a seller can further improve its utility by shill bidding (i.e., pretending to be a buyer in order to bid in its own auction). But, using an evolutionary simulation, we show that this shill bidding introduces inefficiences within the market. However, we then go on to show that these inefficiences can be reduced when the mediating auction institution uses appropriate auction fees that deter sellers from submitting shill bids.
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References
Gerding, E.H., Rogers, A., Dash, R.K., Jennings, N.R.: Sellers competing for buyers in online markets: Reserve prices, shill bids, and auction fees. In: Proc. of 20th International Joint Conference on Artificial Intelligence, Hyderabad, India, pp. 1287–1293 (2007)
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© 2008 Springer-Verlag Berlin Heidelberg
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Gerding, E.H., Rogers, A., Dash, R.K., Jennings, N.R. (2008). Sellers Competing for Buyers in Online Markets. In: Gimpel, H., Jennings, N.R., Kersten, G.E., Ockenfels, A., Weinhardt, C. (eds) Negotiation, Auctions, and Market Engineering. Lecture Notes in Business Information Processing, vol 2. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-77554-6_11
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DOI: https://doi.org/10.1007/978-3-540-77554-6_11
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-540-77553-9
Online ISBN: 978-3-540-77554-6
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