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COS 444 COS 444 Internet Auctions:Internet Auctions:Theory and PracticeTheory and Practice

Spring 2008

Ken Steiglitz ken@cs.princeton.edu

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Field experiments:Field experiments: Testing theory Testing theory

LR 99: tests FP-Dutch and SP-English LR 99: tests FP-Dutch and SP-English revenue equivalence online (pre-revenue equivalence online (pre-eBay) eBay)

LR 00: tests effects of reserves in FP LR 00: tests effects of reserves in FP online (pre-eBay)online (pre-eBay)

Katkar-LR 00: tests public vs. secret Katkar-LR 00: tests public vs. secret reserve on eBayreserve on eBay

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Field resultsField results LR 99: Revenue: English ~ SP, LR 99: Revenue: English ~ SP, Dutch > FPDutch > FP LR 00: open reserve in FP auctions LR 00: open reserve in FP auctions

reduces no. of bidders, reduces reduces no. of bidders, reduces prob{sell} , increases revenue prob{sell} , increases revenue conditional on selling… total conditional on selling… total revenue?revenue?

Katkar-LR 00: open reserve increases Katkar-LR 00: open reserve increases prob{sell} and revenue---relative to prob{sell} and revenue---relative to secret reserve (eBay)secret reserve (eBay)

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TheoryTheory

Order statisticsOrder statistics

pdf of k-th highestpdf of k-th highest

cdf of k-th highestcdf of k-th highest

Application to revenue calculationApplication to revenue calculation

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eBay’s algorithmeBay’s algorithm

What is eBay's complete What is eBay's complete algorithm?algorithm?

Raising your own (high) Raising your own (high)

bid below secret reservebid below secret reserve Raising your own (high) bid when Raising your own (high) bid when

you're less than a bidding you're less than a bidding increment above the second priceincrement above the second price

Etc.Etc.