COS 444 Internet Auctions: Theory and Practice

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COS 444 Internet AuctionsTheory and Practice
Spring 2008 Ken Steiglitz
ken_at_cs.princeton.edu
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Field experiments Testing theory

• LR 99 tests FP-Dutch and SP-English revenue
  equivalence online (pre-eBay)
• LR 00 tests effects of reserves in FP online
  (pre-eBay)
• Katkar-LR 00 tests public vs. secret reserve on
  eBay

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Field results

• LR 99 Revenue English SP,
• Dutch gt FP
• LR 00 open reserve in FP auctions reduces no. of
  bidders, reduces probsell , increases revenue
  conditional on selling total revenue?
• Katkar-LR 00 open reserve increases probsell
  and revenue---relative to secret reserve (eBay)

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Theory

• Order statistics
• pdf of k-th highest
• cdf of k-th highest
• Application to revenue calculation

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eBays algorithm

• What is eBay's complete algorithm?
• Raising your own (high)
• bid below secret reserve
• Raising your own (high) bid when
• you're less than a bidding increment above
  the second price
• Etc.