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computational challenges in E-commerce



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review articles doi 10 1145 1435417 1435435 Economic and social sciences will drive Internet protocols and services into the future by Joan Feigenbaum David C Parkes and David M Pennock Computational Challenges in E Commerce are using computer networks to conduct increasing amounts of their daily business Web search engines auctioned some 10 billion of ad space in 2007 accounting for almost half of all online advertising revenue Sales at Amazon com were 4 13 billion in the first quarter of 2008 including a fast growing revenue stream from selling Web services to other e commerce companies At eBay sales reached 15 7 billion in the second quarter with 84 5 million active users This explosion of large scale e commerce poses new computational challenges that stem from the need to understand incentives Because individuals and organizations that own and operate networked computers and systems are autonomous they will generally act to maximize their own self interest a notion that is absent from traditional algorithm design In this article we provide an overview of Compani es and in d i v i d uals 70 communicatio ns o f th e acm ja nuary 2009 vo l 5 2 no 1 four areas of computation in which incentives play a crucial role resource allocation knowledge integration peer production and interaction and security and privacy Resource Allocation Allocating scarce resources from bread to bytes is a fundamental process that permeates economics and indeed society Participants declare their perceived value for the resource and the market computes the best for example value maximizing allocation and the prices that participants should pay One decentralized prescription for resource allocation is an auction Classical auctions emphasize simple rules for setting allocations and prices which can be determined manually Many of the largest marketplaces in the world including financial exchanges are at their core based on these centuries old procedures In one week of March 2008 the U S



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