Abstract
This paper studies the benefits of using priced options for solving the exposure problem that bidders with valuation synergies face when participating in multiple, sequential auctions. We consider a model in which complementary-valued items are auctioned sequentially by different sellers, who have the choice of either selling their good directly or through a priced option, after fixing its exercise price. We analyze this model from a decision-theoretic perspective and we show, for a setting where the competition is formed by local bidders, that using options can increase the expected profit for both buyers and sellers. Furthermore, we derive the equations that provide minimum and maximum bounds between which a synergy buyer’s bids should fall in order for both sides to have an incentive to use the options mechanism. Next, we perform an experimental analysis of a market in which multiple synergy bidders are active simultaneously.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Hull, J.C.: Options, Futures, and Other Derivatives, 5th edn. Prentice-Hall, Englewood Cliffs (2003)
Juda, A.I., Parkes, D.C.: An options-based method to solve the composability problem in sequential auctions. In: Faratin, P., Rodríguez-Aguilar, J.-A. (eds.) AMEC 2004. LNCS (LNAI), vol. 3435, pp. 44–58. Springer, Heidelberg (2006)
Juda, A.I., Parkes, D.C.: The sequential auction problem on ebay: An empirical analysis and a solution. In: Proc. of the 7th ACM Conf. on Electronic commerce, June 2006, pp. 180–189. ACM Press, New York (2006)
Sandholm, T.: Algorithm for optimal winner determination in combinatorial auctions. Artificial Intelligence 135(1-2), 1–54 (2002)
Sandholm, T., Lesser, V.: Leveled-commitment contracting: a backtracking instrument for multiagent systems. AI Magazine 23(3), 89–100 (Fall 2002)
’t Hoen, P.J., Redekar, G., Robu, V., Poutré, J.A.L.: chapter Decommitment in a Competitive Multi-Agent Transportation Setting. In: Whitestein Series in Software Agent Technologies, pp.409–433. Birkhäuser, Basel (2005)
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2010 Springer-Verlag Berlin Heidelberg
About this paper
Cite this paper
Mous, L., Robu, V., La Poutré, H. (2010). Using Priced Options to Solve the Exposure Problem in Sequential Auctions. In: Ketter, W., La Poutré, H., Sadeh, N., Shehory, O., Walsh, W. (eds) Agent-Mediated Electronic Commerce and Trading Agent Design and Analysis. AMEC TADA 2008 2008. Lecture Notes in Business Information Processing, vol 44. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-15237-5_3
Download citation
DOI: https://doi.org/10.1007/978-3-642-15237-5_3
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-15236-8
Online ISBN: 978-3-642-15237-5
eBook Packages: Computer ScienceComputer Science (R0)