The Design of the Multi-Attribute English Auction with a Deadline Vs. the eBay Auction Protocol1

This paper provides an optimal auction mechanism design for automated agents conducting auctions, for example, auction houses on the web. In particular, we consider auction protocols that include two major features; multi-attribute items and a deadline rule. Three different protocols were analyzed. For each protocol a mechanism was developed that enables the auctioneer agent to compose an optimal scoring function based on its expected revenue’s estimation. Two of these protocols; the simultaneous and the sequential English protocols, were defined in previous work. The incentive of developing these protocols was to overcome the drawback of available auction protocols with a deadline that encourage the anomalous bidders behavior of applying the “last minute bidding strategy” as in eBay and Amazon auction houses. The third protocol we analyzed is the eBay protocol, which is an example of a widespread auction house. We proved that the eBay protocol is always dominated by the simultaneous protocol. Furthermore we showed that there are cases where the sequential protocol achieves better results with respect to the eBay and the simultaneous protocols. Consequently auction houses are motivated to employ one of the two protocols we defined in cases where the probability of losing bids at the last minute is not negligible.