Role of Information Feedback in Continuous Combinatorial Auctions
Speaker
Abstract
| Advancements in Information Technology offer opportunities for designing and deploying innovative market mechanisms. For example, combinatorial auctions - in which bidders can bid on combinations of goods – have been shown to increase the economic efficiency of a trade when goods have complementarities. However, lack of real-time decision support tools for bidders has been preventing this mechanism from reaching its full potential. This study develops novel feedback mechanisms to aid bidders in formulating bids in real-time to facilitate participation in continuous combinatorial auctions. Laboratory experiments examine the effectiveness of our feedback mechanisms; the study is the first to examine how bidders behave in such information-rich environments. In addition, clock-proxy auctions are conducted to serve as a benchmark for comparison of the results from continuous auctions. Our results indicate that availability of feedback results in higher efficiency and higher seller’s revenue compared to the baseline case where bidders are not provided feedback regarding the status of their bids. We find that while auctioneers benefit from providing enhanced level of information; beyond a certain limit, bidders use the information to extract higher surplus thereby reducing sellers’ revenue. Continuous auctions with feedback also outperform clock-proxy auctions in terms of seller’s revenue while yielding similar efficiency. |
| Contact information: |
| Wolfgang Ketter |
