I think some math needs to be done on what the optimal auction structure is given participants arrive and leave at random times.
The english auction with a reserve price that is employed by ebay is equivalent to most other auction types in revenue given typical assumptions, but with people coming and going all the time and auctions taking days rather than minutes the typical assumptions aren't satisfied and perhaps a different method would be better.
My idea is to do dutch auctions rather than english auctions; that is, list a high price that decreases through time. That way every price is a buy-it-now price and bidding becomes less time-consuming. Also, it would eliminate the sniping behavior that is so common on ebay.
They're so entrenched though I'm not sure just having a better auction style will be enough to get traction.
> I think some math needs to be done on what the optimal auction structure is given participants arrive and leave at random times.
EBay implements a second place auction which works well given that all participants may not be present at the same time. It counter-intuitive but it has been shown that a second place auction generates the same revenue as a first place auction, partly because participants compensate for only paying the second highest bid. Indeed, the second place auction system can sometimes cause a bidding fenzy, which leads to auction addiction.
However, a simple application of game theory is to minimise information the is revealed unnecessarily. Therefore, if you treat the auction as a sealed bid auction and snipe in the last minute then you save money.
However, the main problem with EBay is the glut of uncontested auctions. I ran a survey on auctions using a script and I found that less than 1/3 of auctions received any bids at all. Much fewer received two or more bids.
Comments
I think some math needs to be done on what the optimal auction structure is given participants arrive and leave at random times.
The english auction with a reserve price that is employed by ebay is equivalent to most other auction types in revenue given typical assumptions, but with people coming and going all the time and auctions taking days rather than minutes the typical assumptions aren't satisfied and perhaps a different method would be better.
My idea is to do dutch auctions rather than english auctions; that is, list a high price that decreases through time. That way every price is a buy-it-now price and bidding becomes less time-consuming. Also, it would eliminate the sniping behavior that is so common on ebay.
They're so entrenched though I'm not sure just having a better auction style will be enough to get traction.
> I think some math needs to be done on what the optimal auction structure is given participants arrive and leave at random times.
EBay implements a second place auction which works well given that all participants may not be present at the same time. It counter-intuitive but it has been shown that a second place auction generates the same revenue as a first place auction, partly because participants compensate for only paying the second highest bid. Indeed, the second place auction system can sometimes cause a bidding fenzy, which leads to auction addiction.
However, a simple application of game theory is to minimise information the is revealed unnecessarily. Therefore, if you treat the auction as a sealed bid auction and snipe in the last minute then you save money.
However, the main problem with EBay is the glut of uncontested auctions. I ran a survey on auctions using a script and I found that less than 1/3 of auctions received any bids at all. Much fewer received two or more bids.