Sourcing and Electronic Auctions .. the different way

Our Goal is to present most common auction types and  negotiating software agents.

Basic Concepts:

Four Auction Types

•English auction

•Dutch auction

•Competitive sealed bid

•Vickrey auction

1-•English auction:

Description:

•Characteristics: Open–Ascending

•Used for: Art masterpieces–Fish–Everything!

Protocol:

1.initial price declaration

2.if no other bid, auction fails

3.each bid must be higher than the previous one, the initial price being considered as the first bid

4.if no bid is made after n seconds, the last bid is the winner bid

2-•Dutch auction:

Description:

•Characteristics: Open–Descending

•Used for: Tulips in Holland–Produce and cattle markets

Protocol:

1.initial price declaration

2.if the price is not accepted after n seconds, a new lower price is proposed

3.if some bidder accepts the last price, the auction end with a winner

4.if the price is lower than lowest acceptable value, the auction fails

3-•Procurement(Competitive Sealed Bid)

Description:

•Characteristics: Sealed–Towards maximization or minimization of certain values

•Used for: Public procurement–Sourcing

Protocol:

1.Request for proposal (RFP)–Specification of the object–Deadline–Evaluation criteria

2.Bidders submits a sealed bid

3.Bids are opened simultaneously

4.If no bid is acceptable, the auction fails

5.The winner bid is chosen

4-•Vickrey auction:

Description:

•Characteristics:Sealed–Competitive

•Used for: Rare stamps

Protocol:

1.Request for proposal (RFP)–Specification of the object–Deadline–Evaluation criteria

2.Bidders submits a sealed bid

3.Bids are opened simultaneously

4.The high bidder wins

5.The high bidder pays the second-high price

A Taste of Auction Analysis:

RV and MBOO

•Reservation value: Maximal value–Minimal value–Key for English auctions–Key for Vickrey auctions

•Maximum bid of others: Key for Dutch auctions–Key for procurement

Equivalence of Auctions

•In a pure game-theoretical approach: English auctions–Dutch auctions–Procurement–Vickrey auctions

•Lead to the same result: For the auctioneer–For the bidders

Conclusion :

Various auction types

•English•Dutch•Procurement•Vickrey

Auction analysis:

RV and MBOO

Software agents

Simple contracts–Many negotiators