Electronic Auctions and Expressive Mechanisms

8/3/2019 Electronic Auctions and Expressive Mechanisms

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Electronic Auctions and Expressive Mechanisms

V Sai Manoj

P S Pavan Kumar



AGENDA

Introduction

What Is An Auction

Types Of Auctions

What is the economic rationale behind auctions A Framework for Auctions

Auction Protocol

Expressive Mechanisms

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WHAT IS AN ACTION ?

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WHAT IS AN ELECTRONIC ACTION ?



AUCTIONS

Types of auctions.

English Auctions

Dutch Auctions

Sealed first-price auction

Sealed second-price auction

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ENGLISH AUCTION

These are the most common auctions in practice.

Bids ascend, winner gets the item at the price hebid.

Optimal strategy, bid a little more than the nexthighest person.

Just keep going until no one else is bidding.

For the seller to be happy, there must be enoughcompetition to drive up bids

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DUTCH AUCTION

Start at max, auctioneer gradually decreases bid.

Equivalent in terms of revenue to a first-priceauction.

Has the advantage of closing quickly

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SEALED FIRST-PRICE AUCTION

All bidders simultaneously submit sealed bids sothat no bidder knows the bid of any otherparticipant.

The highest bidder pays the price they submitted.

Commonly used in tendering, particularly forgovernment contracts and auctions for miningleases.

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SEALED SECOND-PRICE AUCTION

Submission of bids are same as Sealed first-priceauction.

But the winning bidder pays the second highest bidrather than his or her own.

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REVERSE AUCTIONS

Completely opposite to the forward auction.

In forward auction seller puts an item for sale. Andask bidders to bid.

But, in reverse auctions bidder asks for an item.Sellers will place their respective bids.

Buyer selects the seller who has the lowest price and allthe specifications met.

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FIXED VS DYNAMIC PRICING

Fixed Pricing

Seller sets sales price for an item, and the purchase ismade when a buyer comes along to pay that price.

Took hold when industrial revolution started.

When Demand was higher than Production

Example of Fixed pricing is “Buy It Now” in eBay.

Competition, globalisation and better production

techniques led to a higher production than demand. Now business needs to compete with sales.

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FIXED VS DYNAMIC PRICING CNTD…

Dynamic Pricing

The opening bid amount, is established by seller andpotential buyers offer to pay that price or go beyond itthrough incremental bids.

Prices that are determined based on supply anddemand relationships at any given time.

Ensures sales to businesses.

Example of Dynamic pricing is “Bids” in eBay.

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AUCTIONS AS CO-ORDINATION MECHANISM

Efficient co-ordination mechanism for establishingan equilibrium

Automated auction among software agents tocontrol air conditioning at Xerox (Markoff 1996)

Allocation of telecommunication bandwidth

Little or no human intervention during the tradingprocess.

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AUCTIONS AS A SOCIAL MECHANISM TO DETERMINE A PRICE

Objects which are

Not traded on traditional markets

Unique or rare items

Which are offered randomly or at long intervals

Attracts Potential Buyers

Offers numerous of these special items at one time andthere by attracts a good amount of attention

Piece of fine art or rare items as well as auctions ofcommunication frequencies (cf.Lewyn 1994; Cramton1995)

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AUCTIONS AS EFFICIENT ALLOCATION MECHANISMS

Limited shelf life or last minute

products

Overstocked products

Discontinued or reconditioned item

Accept the product restrictions in return for asignificant discount

Auctioneer maintains the depth and width of themarket

A typical example of this type of auction is Onsale(cf. Economist 1997).

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A Framework for Auctions

Supplier

Customer

Auctioneer Auction

TradeObjects RuleBase

Transaction Phase

WWW/IT

Effect

CompetingAuctionsand Trade Forms

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ACCESS RULES FOR BUYERS AND SUPPLIERS

Institutional design main parameters

Depends on the reputation

Trading goods are available

Promised quality or whether trades are executedwithout frictions

Control mechanisms, required advance payments orother credible commitments of the participants

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THE IMPACT OF THE WEB

Standardized mechanisms for hypermediarepresentation of trade objects

The development and diffusion of standardizedsearch mechanisms and event-driven notificationof bidders as well as.

Mechanisms for secure payments encouragecustomers to opt for Web auctions with electronictrade execution.

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Parameter Impact of the Web

Auctioneer Lower entry barriers, opportunity for direct sales

Access rules Customizable, theoretically millions of potentialcustomers can be reached

Trading objects Focused product segments can be auctioned off,the technology extends the complexity of the productdescription

Trading rules The trading rules reflect the lack of a guaranteedservice

Settlement For digital products the entire trading cycle can behandled on the Web for physical products the tradingprocess and the physical logistics of the trade

objects can be separated, leading to a reduction of

costs.

THE IMPACT OF THE WEB

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AUCTION PROTOCOL

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WHY?

Set of rules

E2E communication

Buyers should reach the truth-full information

Sellers should get accountable Bids

Auctioneers should get to be trusted

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CRYPTOGRAPHIC SUPPORT

To verify a particular auction notice being postedand accessible over a certain period of time

During the process of bidding, the bids should notget tampered and should not disclosed to thebidders

In open outcry auctions, the seller or auctioneerhave a chance to increase the bid-rates.

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CRYPTOGRAPHIC SUPPORT CNTD…

In order to avoid that there should be verifiableconnection between the bidder to another knownbidder.

Presence of knowledgeable bidder should beanonymous.

But internet auctions cant get through thismechanism.

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ONLINE AUCTION PROTOCOL

Different auction protocols have been designed toachieve different goals and requirements

Some auction protocols based on the common

rules

Some auction protocols based addressing thetiming issue of the internet auctions

Every auction protocol have developed based onthe well-known algorithms or procedures like RSA,SSL, DES.

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SEALED-BID

Goal :- Implement sealed-bid protocol in secured

manner.

Process :- Bidding process will be done secretly foran advertisement.

Winner is decided based on the publically known

rule.

Examples :- U.S Govt used this to sell a Govt land.

Issues while developing the protocol Time of disclosure is important.

Non-repudiation mechanisms to ensure payments collected fromthe bid winners

As it is surrounded by secrecy, it may have difficult for bidders tobelieve the validity of auction

Bidders to be anonymous

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TWO PHASES-TWO PROPERTIES

Bidding secretly Opening and announcing winner

These process should ensure two properties Validity :-

The auction eventually closes The winner will be announced based on publically known rule The money collected from the winner should be equal to his

bidding amount Looser bidders wont get any money. Only winning bidder can collect the item.

Secrecy :- Identity of bidder and biddings wont revealed Anonymous bids allowed The messages between the bidders and sellers wont get

interrupted or manipulated

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SEALED-BID PROTOCOLS

Millionaire's Protocol :- Auctioneer A receives Bids from n bidders

The bid range in integers will be set

Each maintain their own encrypt and decrypt functions

Once winner has been announced, the bidder will reach thebid-taker and gives his secret private encryption function

Sealed-Bid protocols with secretsharing shared polynomials :-

Auctions that seeks the address of being economical, fast-access, maintaining privacy

Avoiding the possibility of final bidding is artificially low.

With some modifications, anonymity can be achieved

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Sealed first-price auction Working

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SEALED FIRST-PRICE AUCTION

Step – 1 Registration

b1->blind(PKps) SIGa(b1)

b2->blind(TLP(B)) SIGa(b2)

SIGb(b1,b2,auct)

CERT(PKb)

Step – 2 Bid Submission

Bob encrypts his bid with secret symmetric key K

M->bid,auct_id

Signs M with SKPS Valid Bid (V)

Anonymously sends V, TR AuctioneerBob gets a RECEIPT

He verifies this using CERT(PKs)

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SEALED FIRST-PRICE AUCTION CNTD…

Step- 3 Publication Committed Bids

After process closes Auctioneer publish the committedbids

Step -4 Bids Revelation

Bob reveals himself by sending pair(K,RECEIPT) toAuctioneer

He verifies Bob in Database

Uses K to decrypt the encrypted bid

If Bob will not submit K with in time t, bid will trace backto Bob by solving

Time-Lock Puzzle.

Step- 5 Final Result

Auctioneer decrypted bids, keys used will be published

Step-6 The winner Proof

Bob sends his bid by using his signature, if he is the winnerthe bid will be revealed by solving Time-Lock Puzzle TR.

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EXPRESSIVE MECHANISMS

Especially on the internet have begun allowingpeople or organizations to express richerpreferences in order to provide for greater levels ofoverall satisfaction.

Major Terms

Per-click valuations

Per impression valuations

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EXPRESSIVE MECHANISMS

Expressive mechanisms is adopted in many areaslike

Chemicals

Packaging

Ingredients and raw materials

Marketing

Technology

Medical

Transportation and industrial parts

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BROADER TREND TOWARD EXPRESSIVENESS 5 / 5 / 2 0 1 2

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EXPRESSIVENESS IN SOCIAL NETWORKING

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CONCLUSION

The Web has provided low-cost access to a global

market space and at the same time highly focused

customer groups.

The wide availability of standardized software clients forthe access to auctions, in most cases just Web

browsers, has extended the group of potential

participants.

Cost-efficient communication infrastructures and low-

cost market-engines have enabled auctioneers to set up

auctions quickly and with limited investments.

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Documents

Electronic Auctions and Expressive Mechanisms