Internet Auction Presented by Ying Wang

§Introduction of Internet Auction §Different Internet Auction Methods §Internet Auction Software Design §Some Internet Auction Issues §Internet Auction Sites §References

What is Internet Auction

The Entities in Internet Auction

Use Finite State Machine to model Business Negotiations

Auction Methods §Open-cry auction (English auction) l The buyers gather at a physical/virtual location. l Each buyer can hear the bid of a rival buyer. l A time limitation on overbidding. l Some variations. anonymity. (e.g. the identity of the bidder) Rules to end the auction. the price the winners pay. –Yankee auction: pay the price they bid. –Non discriminative auction: pay the price paid by the winning bidder with lowest bid. –Vickrey auction: pay the price bid by the second highest bidder.

Auction Methods (continue) §Sealed bid auction l The buyers are required to submit their bids by a specified deadline. l The auctioneer keeps the bid information secret until the deadline. l When it is closed, the bids are evaluated and winners are declared. l The auction can be single / multiple round. l Single round sealed bid auctions lack the competitive atmosphere. l Multiple round sealed bid auctions rectify this situation.

Auction Methods (continue) §Dutch auction ¨ Suitable for perishable items. (e.g. vegetable, airplane seats) © The auctioneer starts with a very high asking price. ª Then gradually decreases his asking until the buyers emerge with bids to purchase at the price. ª The auctioneer can continue lowering his bid to maintain a stream of buyers while the inventory lasts.

Auction Methods (continue)  Revenue-Equivalence theorem > Though counterintuitive, Vickrey, Dutch, open cry and sealed bid auctions yield the same revenue for the seller when one item is being sold, the bidders are risk neutral, their valuations are independent draws from the same probability distribution, and each bidder knows only his valuation and the distribution function from which the other bidders draw their valuation. > The outcome of various type of auctions also affected by psychological such as preference reversal and misjudged revision of valuation and winning probability during an auction.

Auction process §Initial buyer and seller registration l Authentication of trading parties l Exchange of cryptography keys l Creation the trader’s profiles §Setting up a particular auction event l Description the item being sold l Setting rules for the auction (auction type, parameter negotiated, time) §Scheduling and advertising l attracting and notify the potential buyers. §Bidding l handle the collection of bids from buyers §Evaluation of bids and closing the auction §Trade settlement

Internet auction software design

Internet auction software design (continue)

Some IA issues  Response time Browser-server communication Peak loading Real time protocols  Scalability Independent processes Lot creation  Security

Auction web sites, auction), (using yankee auction), (person-to-person auction), (using English auction), (using English auction), (using Dutch auction), English auction), based, can access multiple retailer),

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Auction methods used by onsale/egghead

Client side auction agent used by onsale/egghead

What I bought on onsale §TPI w/Cyrix MII 333, 64MB, §6GB Hard Disk, 36 X CD §56K (V.90) 17” Monitor §Time: Nov. 17, 1998 §Cost: $699 §Shipping fee: $99 §Total: $798 §Problem: l Monitor did not work, took 1 month to repair by TPI l Unpredictable system halt under 95/NT, ok under linux l keyboard did not work after one year