Showing papers on "Bidding published in 1995"

Method and system for providing a document service over a computer network using an automated brokered auction

Abstract: A system and method to enable and facilitate networked, automated, brokered auctioning of document services. A plurality of processes are executed, including a customer process representing a customer, a supplier process representing a supplier, and a broker process capable of serving as an intermediary between the customer and supplier processes. The broker process is provided with a description of a document service. Responsively to the description thus provided, an auction for the document service is conducted, as follows: a customer or supplier process submits a bid for the document service; the broker process receives bidding information including the submitted bid; the broker process attempts to establish a price for the document service responsively to the received bidding information and, if a price can be established, establishes the price; if a price is established, the broker process proposes a transaction wherein the document service is to be provided at the established price; and if the proposed transaction is accepted, it can proceed automatically.

Method and system for matching sellers and buyers of spot metals

Abstract: A system for managing steel inventories in order to reduce the time and expense associated with selling prime and secondary steel that is no longer needed for the original intended application. The system permits sellers to post detailed specification of an item for sale and permits buyers to browse or search the posted inventory to locate items filling specific needs. A buyer may bid on part or all of an item posted and the seller may accept or reject any bid. The buyer and seller engage in an auction by electronic mail and optionally by facsimile. The detailed specifications of the item may be expressed in a variety of unit of measure. Regardless, of unit of measure used by a seller in posting an item, the system performs the necessary conversions to display information to an interested buyer in a unit of measure set by the buyer. A hierarchial menu structure permits ease of use in selecting available options during posting or bidding an item.

Diverse goods arbitration system and method for allocating resources in a distributed computer system

Abstract: A diverse goods arbitration system and method allocates computer resources among bidding requesters. Bid slates are transmitted to an arbiter by users (requesters) requesting use of specified portions of the available computer resources. Each bid slate may contain a plurality of bids, each bid representing a requested set of resources and a bid price. The arbiter selects combinations of bids from the bid slates, where each bid combination consists of no more than one bid from each of the received bid slates. The arbiter rejects all bid combinations whose constituent bids exceed an established maximum allocation level for any computer resource. It then selects as a winning bid combination the bid combination having the highest total bid price. Computer resources are then allocated for a next time period based on the winning bid. Costs are allocating to each successful requester in accordance with a predefined opportunity cost function. In particular, for each successful requester, the arbitration process is repeated while excluding that successful requester's bid slate from the set of bid slates considered, resulting in the selection of a second winning bid that excludes the successful requester. The successful requester is then assessed a cost corresponding to the difference between the winning bid's total bid prices, excluding the price in the successful requester's granted bid, and the total bid prices associated with the second winning bid.

Application of auctions as a pricing mechanism for the interchange of electric power

Abstract: The expected move to a market-based electric power industry will significantly change electric utility operations. These changes will fundamentally alter the pricing of electric power. How this pricing will be accomplished is a key issue. Traditionally, embedded cost based methods have been used. Spot-pricing has received attention as a possible approach in a market-based electric power environment. Another market-based approach is the use of auctions. This paper presents the application of a sequential sealed-bid and sealed-offer auction to the pricing of electric power by using linear programming. >

Simultaneous Auctions with Synergies

Abstract: Motivated by recent auctions of licenses for the radio frequency spec trum, we consider situations where multiple objects are auctioned simultaneousl y by means of a second-price, sealed-bid auction. For some buyers, called globa l bidders, the value of multiple objects exceeds the sum of the objects' values separately. Others, called local bidders, are interested in only one object. I n a simple independent private values setting, we (a) characterize an equilibri um that is symmetric among the global bidders; (b) show that the addition of bi dders often leads to less aggressive bidding; and (c) compare the revenues obta ined from the simultaneous auction to those from its sequential counterpart.

The Role of Information in U.S. Offshore Oil and Gas Lease Auctions

Abstract: This paper describes the U.S. offshore oil and gas lease sales conducted by the Department of the Interior since 1954. Several decisions are discussed, including bidding for leases, the government's decision whether to accept the highest bid, the incidence and timing of exploratory drilling, and the formation of bidding consortia. Equilibrium models of these decisions that emphasize informational and strategic issues and that account for institutional features of the leasing program are analyzed, and their predictions compared to outcomes in the data. AN IMPORTANT ASPECT of any market is the information available to partici- pants. The social and private costs of information imperfections are com- pounded in strategic settings, where participants may exploit informational asymmetries. Information can play a crucial role in an auction. A seller (or a buyer in a procurement auction) often resorts to an auction market because of uncertainty about the market price for the item in question. That is, the seller is uncertain about others' willingness to pay. At the same time, buyers may be uncertain about their rivals' valuations of the item, and they may be uncertain about the value of the item for themselves, such as when there is an unknown common valuation component. If one buyer has access to information superior to that of its rivals, such as a more precise signal of the item's worth on a future resale market, informational rents may be obtained. Even if buyers have symmetric information, in the sense of equally precise signals, they must account for the winner's curse in uncertain environments because the item will be won by the buyer with the most optimistic assessment of the item's worth. Buyers have incentives to pool information or to gain an advantage by learning of a rival's intentions. If ex post signals of the item's worth are available, the seller can increase profits by making payment contingent on the ex post signal, say via a royalty payment that supplements any fixed payment. However, if the buyer can affect the value by ex post actions, a moral hazard problem arises, and excessive reliance on a royalty rate may distort incentives. The game is not zero-sum, so inefficiencies may result.

Management of Information Systems Outsourcing: A Bidding Perspective

Abstract: :Outsourcing is the contracting of various information systems’ subfunctions by user firms to outside information systems vendors. A critical factor in the outsourcing process is the bidding and vendor selection mechanism. This paper describes the process of outsourcing and identifies the various stages involved. Subsequently, considering that cost reduction is a driving force of outsourcing for user-firms, this paper proposes a bidding mechanism to reduce expected outsourcing costs in the final bidding and vendor selection process. The paper studies outsourcing contracts of routine and repetitive activities such as maintenance and operation of telecommunication networks. A realistic scenario is studied, wherein multiple vendors bid for such contracts and where one vendor has cost and expertise advantages over other vendors and as a result tends to inflate bids. A mixed integer programming model is formulated for a multiple vendor scenario. In general, the results suggest a prescription that calls...

Competitively bidding service centers

Abstract: A plurality of service centers, disbursed throughout a telecommunications network such as the public switched telephone system (PSTN), competitively bid for the rights to service a particular call to be serviced from one of the service centers. After comparing the cost (or other parameter to be optimized) of servicing a call from the numerous different service centers, the cost (or other parameter) of the call is minimized (optimized) by assigning it to the service center which can service the call at the lowest possible cost (best value of any other parameter).

The design and implementation of a secure auction service

Abstract: We present the design and implementation of a distributed service for performing sealed-bid auctions. This service provides an interface by which clients, or "bidders", can issue secret bids to the service for an advertised auction. Once the bidding period has ended, the auction service opens the bids, determines the winning bid, and provides the winning bidder with a ticket for claiming the item bid upon. Using novel cryptographic techniques, the service is constructed to provide strong protection for both the auction house and correct bidders, despite the malicious behavior of any number of bidders and even a constant fraction of the servers comprising the auction service. Specifically, it is guaranteed that (i) bids of correct bidders are not revealed until after the bidding period has ended, (ii) the auction house collects payment for the winning bid, (iii) losing bidders forfeit no money, and (iv) only the winning bidder can collect the item bid upon. We also discuss techniques to enable anonymous bidding. >

Decentralized regulation of a queue

Abstract: A bidding machanism for determining priorities in a service system is analyzed. It is shown that when all customers have the same exponential service demand, this mechanism induces both the socially optimal arrival process and the service order. It is also shown that the profit-maximizing service rate in this model is smaller than or equal to the socially optimal one.

A+b bidding method--hidden success story for highway construction

Abstract: In the last decade, many departments of transportation around the United States have experimented with using the A+B bidding method. In this method contractors bid on the cost (part A) and on the time (part B), and the lowest combined bidder (A+B) is awarded the project. This paper analyzes 101 projects that have been awarded using this method and compares the results to the cost and the time of similar projects that were bid using conventional methods (cost only). The conclusions from the research show that substantial savings in construction time have been achieved when using the A+B method with almost no addition in cost. This was achieved by better planning and management of motivated contractors that were using the time element as part of their bidding strategy. The paper includes details on several case studies that demonstrate these results.

Auction allocation of computing resources

Abstract: Standard methods for allocating computing resources normally employ schedulers and either queue or priority schemes. Alternative methods utilizing marketlike processes are being investigated, with direct applicability to evolving distributed systems. In this article, we present results of simulations of an auction allocation is which computing tasks are provided sufficient intelligence to acquire resources by offering, bidding, and exchanging them for funds.

Ambiguity Aversion in First-Price Sealed-Bid Auctions

Abstract: Experiments on first-price sealed-bid auctions with independent private values have shown that submitted bids typically exceed Nash-equilibrium predictions for risk-neutral bidders. Existing bidding models explain this phenomenon by assuming that the bidders are risk-averse and capable of drawing complete and correct inferences about their winning probabilities. In this article, we use the Choquet expected utility (CEU) theory to demonstrate that the observed bidding behavior can also be attributed to ambiguity aversion which causes the bidders to underestimate their chances of winning the auction. Empirical support for CEU bidding models is given through an analysis of recent bidding data.

Comparative static effects of number of bidders and public information on behavior in second-price common value auctions

Abstract: Comparative static tests of Nash bidding theory in second-price common value auctions show that bidders fail to respond in the right direction to more rivals and to public information concerning the value of the item. The former provides a clear indication that bidders fail to appreciate the adverse selection forces inherent in common value auctions, while the latter shows that policy prescriptions can fail given out-of-equilibrium behavior. These tests of Nash bidding theory apply to a far wider variety of circumstances than in first-price auctions, so there is less scope to rationalize the failure of the theory.

Two Models of Bid-Taker Cheating in Vickrey Auctions

Abstract: Vickrey (second-price sealed-bid) auctions have attractive theoretical properties but standard first-price sealed bidding is far more common. Explanations of the rarity of Vickrey auctions rely on concern about revelation of private information and on fear of cheating. The authors present two models of bid-taker cheating: a static, game-theoretic model and a reputation-based model of repeated auctions. In the first, an honest bid-taker will not choose a Vickrey auction. In the second, a trusted bid-taker who cheats when it pays eventually destroys his or her reputation and the trust on which the use of Vickrey auctions depends. Copyright 1995 by University of Chicago Press.

Secret Reserve Prices in a Bidding Model with a Re-Sale Option

Abstract: This paper presents an auction model in which the seller may choose not to sell in spite of receiving a bid above the announced reserve price. Such behavior is seen frequently in auctions, yet would be suboptimal within most existing models. Here, the seller uses resale to signal information about the object's value that could not be easily communicated via a reserve price announcement. The model predicts that bids for reauctioned objects increase relative to initial bids and that, on average, prices of both reauctioned items and those sold at initial auction rise as delay in reauctioning increases. Copyright 1997 by American Economic Association.

Risk Assessment of Competitive Procurement

Abstract: A method is proposed to evaluate the risk of cost growth in competitively procured construction projects. It uses computer records of past bid data and an inferential statistical technique to simultaneously assign projects into two risk categories. One category is based on the observed disagreement between the winning bid and the other submitted bids. The other is based upon the observed bias in the bidding pattern of the winning bidder. Results verify differences in cost growth for both risk categories. Projects awarded to the most extreme bids are seven times more likely to experience excessive cost growth than a project awarded to a more reasonable bid. Similarly, projects awarded to extreme bidders have average cost growths 3.5–4 times higher than if awarded to more reasonable bidders. This risk-assessment method would prove useful in the bid-evaluation procedures of public agencies. It appears from these results that agencies that make bargains based upon competitive procurement, often do not receive...

Vacations and holiday scheduling method and system having a bidding object which enables employees to bid and prevent from bidding if higher priority employees have not bid

Abstract: The present invention provides a vacation and holiday scheduling system. The system includes a variety of objects to assist a business in controlling and managing the scheduling of vacations by their employees and for assisting the employees in bidding on vacation days and holidays based upon employee seniority.

Price Discrimination and Mergers

Abstract: The authors demonstrate how purely anticompetitive horizontal mergers can produce larger gains for merging firms than for nonmerging firms. Moreover, these anticompetitive mergers do not promote entry. These findings, which eliminate a long-standing free-rider problem from the previous merger literature, stem from the ability of firms to price discriminate under asymmetric competition. To illustrate, the authors use a spatial model of consumer preferences. Their results suggest that merger may significantly reduce consumer surplus in markets with certain characteristics, such as those where bidding occurs. The authors' model also shows that price discrimination facilitates entry deterrence in spatial markets.

Bid Rigging and the Threat of Government Prosecution

Abstract: In this article, I develop a simple bidding model in which collusion is endogenous. Buyers at a first-price sealed-bid auction decide whether to rig their bids given that they face the threat of government prosecution. A legal authority chooses whether to investigate the buyers on the basis of the bids tendered. In the unique sequential equilibrium of the game, buyers rig their bids with positive probability, but the legal authority can never ascertain, on the basis of the bids alone, that a conspiracy has formed.

Withdrawable Bids as Winner's Curse Insurance

Abstract: When bidders have a common value or strongly affiliated values for an object or contract being auctioned by sealed bids, it is possible that the maker of a rational and apparently winning bid would, upon learning the competing bids, prefer losing the auction to honoring his bid. The ability to withdraw a bid, perhaps at a cost, in such circumstances provides a form of “winner's curse insurance.” Bidding with such insurance is analyzed, obtaining the general condition for rational bid withdrawal and sufficient conditions for the existence of an equilibrium with more aggressive bidding. Next, we define a “compensation penalties” bid withdrawal penalty scheme and show that with it the bid-taker is better off on the average than if bid withdrawal is impossible. Finally, we find equilibrium bidding and withdrawal strategies in a multiplicative model as a function of the magnitude of the bid withdrawal penalty and of the bid-taker's likelihood, after a withdrawal, of honoring the second-best bid. This model has...

Competitive urban policy and the regeneration game

Abstract: The introduction of competitive bidding in the allocation of urban policy funding through City Challenge and the Single Regeneration Budget has significantly changed the British Government's approach to the problems of inner city decline and deprivation. Great claims have been made by the Government about the beneficial effects of competition, particularly in relation to City Challenge. This paper reports on research carried out on the impact of City Challenge on authorities that were unsuccessful in securing funding. The results suggest that some new partnerships have been formed (mainly with the private sector), some projects have proceeded in spite of the lack of funding from City Challenge, and some authorities have adopted new ways of working, including more corporate, cross-departmental and inter-agency liaison. However, there is widespread disillusionment with the competitive bidding process. The wider implications of the introduction of competition into the allocation of urban funding are discussed, and it is concluded that the current approach can never be a viable alternative to a more substantial and rational resource allocation based on an assessment of need on a national basis.

Market Provision of Custom Software: Learning Effects and Low Balling

Abstract: Due to reusability of program code and learning effects in software development, development cost of custom software typically decreases in time and experience. This creates a first-mover advantage to software developers. The paper studies whether the benefits of declining development costs are passed on to buyers in the form of lower prices when developers bid strategically. By using a model of bidding auctions we characterize equilibrium bidding strategies of two software developers. In order to become the first mover and attain future market dominance, developers find it optimal to forgo profits from the first projects. As a result, bid prices = development cost plus a profit margin to the developer to the buyers may not necessarily decrease over time, and even if so, not as fast as development cost drops. We also show that bidders expect a higher profit margin from a high-variance project. Thus, if there exist high-variance projects in the future, developers are more likely to submit below-cost bid prices or "low ball."

Impact of market restructuring on power systems operation

Abstract: What effect will competitive pricing have on control center applications, information technology requirements, and transaction analysis? The move toward market-based pricing places significant new requirements on the utility's technological infrastructure. Information systems and control center applications and procedures are all affected, albeit to varying degrees. A few examples of affected functions are bidding procedures, ancillary services, and financial hedging contracts. This article has outlined some of the changes that may be coming to the Electricity Supply Industry in the United States as it moves to one which makes more use of marginal pricing concepts. In many respects, the major changes are changes in mind set and procedures. Many of the control and analysis tools will remain the same. >