Auction Mechanism In The Network Economy

In recent years, great progresses have been made in electronic commerce, especially in internet auctions, to which various theoretical and practical studies have been conducted.In the first part, we investigate a new auction model in which bidders have both copy and budget constraints. The new model has extensive and interesting applications in auction of online ad-words, software licenses, etc. We consider the following problem: Suppose all the participators are rational, how to allocate the objects and at what price so as to maximize auctioneer's revenue.We introduce a new kind of mechanisms called auctioneer-advantaged mechanisms and present the notion of unconditional competitive auctions. A notably interesting property of auctioneer-advantaged mechanisms is that each bidder's self-interested strategy brings better utility not only to himself but also to the auctioneer. Then we present auctioneer-advantaged mechanisms for multi-unit auctions with copy and budget constraints. We prove that these auctions are unconditional competitive under the situation of both limited and unlimited supply.In the second part, we study the ad-word auction, used by Google for Internet advertisement. We are interested in the dynamic process how bidders interact to reach an equilibrium. We consider such an auction process as a dynamic incomplete information noncooperative game, where every player will take into account both her current behavior and its effect on the other players' future behavior. As the process of on-line advertisement is fully computer controlled, the outcome of each displayment opportunity can be totally different. It can indeed (and often so) be implemented as such a dynamic noncooperative game.Based on this observation, we propose bidders' strategy, forward-looking best response function, and relevant equilibria, as suitable solution concepts. The concept takes into consideration important factors in buyers' strategic behavior in the dynamic process of adwords auctions. We prove the solusion is output truthful and its pricing and allocation scheme is equivalent to the VCG auction outcome.Most importantly, we analyze the convergence property of this solution concept. We study several dynamic adjustment schemes. We prove that a randomized adjustment scheme will converge to forward-looking Nash equilibria with probability one. On the other hand, we show that oscillation may emerge in both simultaneous adjustment scheme and sequence adjustment scheme.In the third part, we study the eBay online auction system, which is the world's largest online marketplace for businesses and consumers to auction off goods through it. In this online auction system, the seller puts on the item and relevant information, and the buyers buy the item by submitting their bids. We observe there are split markets in eBay's online auction system. In other words, there exist several auctions that sell the same item simultaneously in most cases. We study the buyers' strategic behavior in such split market. We show that the split market has a Bayesian-Nash equilibrium. Further, we analyze the expected total revenue in the split market in comparison with a single market.