On Wed, Dec 20, 2000 at 09:35:01PM -0700, William Fulmor (wpfulmor_at_dimensional.com) wrote:
> On Wed, 20 Dec 2000, Sellam Ismail wrote:
>
> > This argument assumes that the eBay method of auctions has been around
> > forever, which it has not. eBay's auction format is something completely
> > new, and is completely biased towards the seller.
>
> [...]
>
> Unhhh no. Sorry. Unless a 50 year old auction system counts as
> 'completely new'.
>
> http://www.britannica.com/seo/w/william-vickrey
A second-bidder auction without sealed bids is not a Vickrey auction.
You can't snipe a Vickrey auction.
>
> I have no idea if eBay selected Vickrey's model, or duplicated it by
> accident, but AFAICT the only difference between theirs and his is that
> with eBay, the winner pays one bid increment above the runner up's bid,
> instead of exactly the lower bid.
They got that part mostly right; the idea of "bid increments" would be
unnecessary in a Vickrey auction for a simple reason. In a Vickrey
auction, the problem of incomplete information is equal for all
bidders, while in an eBay auction, the current winner is on the losing
side of an information imbalance. The simplest example of the
difference I can think of is that you can submit a
high-but-not-too-high bid five days before the close of a Vickrey
auction and win if the other bidders bid less, even if the other
bidders decide after having found out your bid that that price would
have been reasonable (since, after all, someone was offering it). In
an eBay auction, submitting a high-but-not-too-high bid five days
before an auction gives other bidders the opportunity to bid
increasingly higher increments to get an idea of how high your maximum
*is*; at that point, they need only wait until the end to bid over it
so that you don't have *time* to bid higher. *Since* that situation
exists, it becomes rational for *all* participants to hide their
information, meaning that all those bidders that are able to do so
will wait until the last moment to make their bid, at which point the
auction is decided as much by network latency and chance as it is by
matters of value and market forces.
I'm not aware of any non-Web auction procedure which when followed
without prejudice makes it possible for someone to win on the basis of
timing rather than bid.
> Is this O/T, or what?
Yeah, but it's given me a great idea for a thesis.
-Rich
--
------------------------------ Rich Lafferty ---------------------------
Sysadmin/Programmer, Instructional and Information Technology Services
Concordia University, Montreal, QC (514) 848-7625
------------------------- rich_at_alcor.concordia.ca ----------------------
Received on Wed Dec 20 2000 - 23:05:31 GMT