Online AuctionTopic: Online AuctionSlide 3Slide 4Slide 5Slide 6Slide 7Slide 8Slide 9Slide 10Slide 11Slide 12Slide 13Slide 14Slide 15Slide 16Slide 17Slide 18Slide 19Slide 20Slide 21Slide 22Slide 23Slide 24Slide 25Slide 26Online AuctionInstructor: Jerry Gao Ph.D.San Jose State Universityemail: [email protected]: http://www.engr.sjsu.edu/gaojerryMay, 2000Topic: Online Auction- Introduction of Online Auction- Types of Auction Models- Traditional Auctions Versus Electronic Auctions - Auction Process- Auction Requirements - Online Auction - Auction Protocols- Agent-Based Auction Systems- Problems and IssuesJerry Gao Ph.D. 5/20000OutlineAll Rights ReservedJerry Gao Ph.D. 5/2000Introduction to Online AuctionTopic: Online AuctionAccording to the Webster Universal College dictionary,“Auction, also called public sale, is a publicly held sale at which property or goods are sold to the highest bidder.”McAfee and McMillan (1987) states that:“an auction is a market institution with an explicit set of rules determining resource allocation and prices on the basis of bids from the market participants”The earliest web- based auctions:- Onsale appear in May 1995- eBay opened in September 1995Jerry Gao Ph.D. 5/2000Types of Auction ModelsTopic: Online AuctionDouble AuctionClosedAuctionEnglishAuctionDutch AuctionCallAuctionContinuous AuctionDouble English AuctionDouble Dutch AuctionEnglish -Dutch AuctionJapaneseAuctionprivateyesascendingnodescendingpublicorder-book‘clock’periodiccontinuousMultiple bids - multiple offersForms of bidsSequence rule?sequencemultiplesingleOccurrence of trans.Ordering mechanismJerry Gao Ph.D. 5/2000Types of Auction ModelsTopic: Online AuctionEnglish Auction: continuous ascending auction. (Open-Cry/First-Price auctions)Bidders: see high bid and possibly high other bidders’ bids andcomments, and update their bids during the auction.Winner: the highest bidder and pays the price bid.Example: OnsaleFirst Price Sealed Bid Auction:Bidders: email in secret buds for item;bids are opened simultaneously. no chance to update the submitted bids.Winner: the highest bidder is the winner.Example: The Chicago Wine Company, Timeshare Resale International.Dutch Auction: continuous descending auction.Auctioneer: begins at a high price and incrementally lowers it until some bidder signals acceptance to but at the current price. Bidders: see current price and make a bid or wait until it drops.Winner: the first bidder at the current price.Example: Bookbid, Klik-Klok Dep. Store.Jerry Gao Ph.D. 5/2000Types of Auction ModelsTopic: Online AuctionContinuous Double Auction: similar to NASDAQbuyers/sellers: continuously view market and prices, make real-time offers, which clear at market price.Example: Auction DepotSealed Double Auction:buyers/sellers:simultaneously submit secret sealed offers to buy and sell. Auctioneer opens offers and clears market.The auction repeats several times to give a continuous market price.Example: FastpartsVickrey Auction: similar to first price sealed bid auction.Bidders: email in secret buds for item;bids are opened simultaneously. no chance to update the submitted bids.Winner: the highest bidder is the winner. The winner only pays amount of second-highest bid.Example: Antebellum Covers.Reverse Auction: buyers and sellers together to set a mutually agreeable price.Sellers: the seller bids the price down for the buyer.Example: Travelbids.com, Fastparts.comReserve Price Auction: continuous descending auction.Bidders: see current price and make a bid or wait until it drops.Winner: the first bidder at the current price.Example: Bookbid, Klik-Klok Dep. Store.Types of Auction ModelsTopic: Online AuctionJerry Gao Ph.D. 5/2000Jerry Gao Ph.D. 5/2000Traditional Auctions Versus Electronic AuctionsTopic: Online AuctionAuction Attributes Traditional Auctions Electronic AuctionsAuction Schedule fixed schedule available 24/7/365Auction Location auction site or room auction web site on the InternetAuction Process manually controlled systematic controlledAuction Transaction manual automatic and systematicSupporting people people, network and Internet supportAuctioneers people auction systemsBuyers/sellers people people/software agentAuction items limited no. Large selection no.Item evaluation experts expertsAuction overhead higher lowerDecision time very limited unlimited Item checking physically checking no physically inspectionAuction rules fixed configurable and changableMajor disadvantages of traditional auctions:- Limited variety and breadth of goods- Buyers are limited to searching through multiple auctionsor traveling to numerous geographically dispersed areas for auctions - Inefficient transactions, and high transaction cost- Fixed schedules, locations, rules, and auction types- Low riskMajor advantages of online auctions:- Broader variety of goods and large number of buyers and sellers- Low-cost of transactions- Automatic and efficient transactions- Flexible, convenient, and easy access and participate auctions- Direct communications between buyers and sellers- High risk and inefficient item inspectionTraditional Auctions vs. Online AuctionsTopic: Online AuctionJerry Gao Ph.D. 5/2000Jerry Gao Ph.D. 5/2000Online Auction ProcessAn online auction process involves an auctioneer, bidder, and seller.An online auction process consists of:• a bidding process• a selling process• the auction rules• transaction processing• auction protocols• auction algorithms• auction servers supports different types of auctions and features Topic: Online AuctionJerry Gao Ph.D. 5/2000Requirements of Online AuctionSecurity: - Ensure to provide secured transactions- Provide secured solutions to protect the online system from:- active attacks by an intruder- any unpredictable termination of transactions- corruption of data on the network Privacy: Make sure that all information related to buyers and sellers,bids, and offers are protected to be exposed to other parties, external, public.Anonymity: Make sure that the system should be designed in a way that nobody should recognize the true identity of the customer unless it is desirable.Atomicity: The auction transactions should be conducted in a way that either itcome to a completion, or terminate without any incomplete transaction.Low cost: the cost of come transaction should be kept as minimal as possible. Insurance, performance and scalablility.Topic: Online AuctionJerry Gao Ph.D. 5/2000Online Auction