Bidirectional Auction Using a Bid-window : Auction and Reverse-Auction Hybrid
Original Publication Date: 2001-Nov-27
Included in the Prior Art Database: 2003-Jun-20
Bidirectional Auction Using a Bid-window : Auction and Reverse-Auction Hybrid Introduction Competitive bidding for items or services over the Internet is typically modeled as either an Auction or a Reverse Auction:
Bidirectional Auction Using a Bid-window : Auction and Reverse-Auction Hybrid Introduction
Competitive bidding for items or services over the Internet is typically modeled as either an Auction or a Reverse Auction:
Auctions are ideal for obtaining the highest price for a item or service which the consumer market is willing to pay. Typically a minimum price is established, so the seller is in a no-risk situation: the item will sell at or above an acceptable minimum price, or will remain in the possession of the seller. Auctions are not as attractive to a seller when the seller is at risk of loosing value if the item is not sold.
A Reverse Auction is ideal where good/services have an associated life, after which the item looses significant value, if not all value. For example, in the travel (expired ticket) and produce industries (old-food). The reverse auction attempts to balance optimal value for the seller with the risk of reaching a point of no-value by offering lowing prices to the consumer.
However, with the reverse auction, the competitive consumer risks a good price by waiting, hoping for a better price. If the consumer "misses" the bid, there is no recourse. This becomes a psychological game, a game of poker, between the consumers.
Current bidding processes in use in the stock markets today can benefit both the seller and the consumer in this game, on the basis that a consumer, playing the game for lowest prices, might be willing to pay more than the current bid price.
More value for the seller can be obtained by reintroducing the option of bidding a price back up, yet preserving the price/risk balance desired for time-sensitive goods. This provides potentially greater value (but no worse value than the reverse-auction) to the seller. The competitive consumer retains a way to recoup a "lost opportunity" or a "good deal" if they wait to long before making a bid.
Overview of the Auction
An Auction presents a quantity (1 or more) of goods (items or services) before a set of bidders with a competitively low minimum price. The bidders compete by submitting incrementally higher bids for some quantity of the goods. The highest bidder, at some predetermined point in time, wins the right to purchase the desired quantity of goods. The next highest bidder wins the right to purchase any remaining goods, etc. Bidders are typically aware of the bids submitted by competing bidders.
An Auction is characterized as follows:
Initial parameters are established:
A quantity Q of goods (1 or more items or services) is offered.
An end-of-auction time is established and published.
A minimum price (P_m) is established and published.
Bidders are aware of bids submitted previously by all active bidders, and may add or change
(withdraw, increase, or decrease) a bid. Bidders compete for goods by submitting bids for some quantity Q_b, Q_b <= Q, of the goods
The goods are sold to the bidder holding the highest bid greater than P_m at...