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The Computer Journal Advance Access published online on April 21, 2009
The Computer Journal, doi:10.1093/comjnl/bxp028
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© The Author 2009. Published by Oxford University Press on behalf of The British Computer Society. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org

Modelling Bidders in Sequential Automated Auctions

Kumaara Velan*

Intelligent Systems and Networks Group, Department of Electrical and Electronic Engineering, Imperial College, London SW7 2BT, UK

* Corresponding author: kumaara.velan{at}imperial.ac.uk

Received 19 January 2009; revised 24 March 2009

Auctions are mechanisms that formalize the rules with which automated trading schemes can be conducted, and in this paper we model the interaction of bidder and seller agents in sequential computerized auctions. We study the outcome of strategies that a designated ‘special bidder’ (SB) may follow in the presence of a collection of other bidders in an English auction, under the assumption that the SB can make bids based on its observation of the ongoing auction as a collective system. In our model, bidding and sale events are continuous time random processes with discrete state-space, where the state-space represents the current value of the most recent bid. We obtain analytical solutions that allow the evaluation of measures of interest to the SB such as the probability of winning, the savings with respect to the maximum payable price in the event of a win and the expected waiting time to win. We examine the effects of the SB's time to bid, and study how its decisions may be selected so as to optimize the SB's measures of interest.

Key Words: automated auctions • analytical models • autonomic systems • internet technologies • e-commerce • queueing systems

Handling editor: Erol Gelenbe


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