Bilateral Negotiation With Fees
(Download full paper)Filed under research category: Online market design
Tagged as: auctions online_markets market_design incentive-centered_design
Authors
Anderson, A., I. Birgean and J. MacKie-Mason
Publication date
March, 1999
Abstract
Bilateral negotiation over a single good or service is a fundamental problem for automated systems, and is surprisingly resistant to general solutions. In this paper we offer advice and new results for the design of electronic negotiation and market systems. We review the theoretical and experimental literature as guide to pragmatic design. We then investigate how some well-studied simple mechanisms could be extended with transaction and entry fees to improve their efficiency or their budget balance. The goal is to support pragmatic design for online automated transactions. We find that an iterated Generalized Vickrey Auction with fees can maintain budget balance and improve trading efficiency over a single-shot GVA. For k-double auctions we find that when processing costs are a function of the number of bids then efficiency favors entry fees, while transactions fees are favored if processing costs are a function of the number of transactions. We present simulations to support our theoretical conclusions.
Citation
Proceedings of the First IAC Workshop on Internet Based Negotiation Technologies, Hawthorne, NY, March 18-19, 1999.