The design and implementation of a secure auction service

We present the design and implementation of a distributed service for performing sealed bid auctions. This service provides an interface by which clients, or “bidders”, can issue secret bids to the service for an advertised auction. Once the bidding period has ended, the auction service opens the bids, determines the winning bid, and provides the winning bidder with a ticket for claiming the item bid upon. Using novel cryptographic techniques, the service is constructed to provide strong protection for both the auction house and correct bidders, despite the malicious behavior of any number of bidders and fewer than one third of the servers comprising the auction service. Specifically, it is guaranteed that: bids of correct bidders are not revealed until after the bidding period has ended; the auction house collects payment for the winning bid; losing bidders forfeit no money; and only the winning bidder can collect the item bid upon. We also discuss techniques to enable anonymous bidding     

一种保护标价安全的电子拍卖方案

电子拍卖的一个热点问题是保护标价的秘密性，因为存在第三方不可信任或相互勾结．提出了一个实用的保护标价安全的电子拍卖方案，除了中标价以外，它在任何勾结攻击情况下都能保证投标者标价的秘密性，可以公开验证中标价的正确性，效率远远高于最近Brandt提出的方案．其实现只需要O（log2υ）轮通信，其中υ是标价的范围．投标者注册使用数字签名后能保证协议的不可伪造性、抗重放攻击性和不可否认性．协议中使用零知识证明的安全性保证了系统的鲁棒性．     

What Format for Multi-Unit Multiple-Bid Auctions?

This paper uses computational experiments where bidders learn over nonlinear bidding strategies to compare outcomes for alternative pricing format for multi-unit multiple-bid auctions. Multi-unit multiple-bid auctions, in which bidders are allowed to submit multiple price-quantity bids, are promising mechanisms for the allocation of a range of resources. The main advantage of such auctions is to avoid the lumpy bid problem which arises when bidders can only compete on the basis of one bid. However, there is great uncertainty about the best auction formats when multi-unit auctions are used. The theory can only supply the expected structural properties of equilibrium strategies and the multiplicity of potential equilibria makes comparisons across auction formats difficult. Empirical studies and experiments have improved our knowledge of multi-unit auctions but they remain scarce and most experiments are restricted to two bidders and two units. Moreover, they demonstrate that bidders have limited rationality and learn through experience. This paper constructs an agent-based computational model of bidders to compare the performance of alternative procurement auction formats under circumstances where bidders submit continuous bid supply functions and learn over time to adjust their bids in order to improve their net incomes. The setting is for independent private values. We show that bidding behaviour displays more interesting patterns than is depicted in the theoretical literature and that bidding patterns depend on the interplay between heterogeneity in the bidder population and the degree of rationing in the auction. Results indicate that the three auction formats have similar performance for most levels of competition but that their performances differ when competition is weak. This ranking is dependent on whether the population of bidders is homogenous or heterogeneous.     

Design of online auctions: Proxy versus non-proxy settings

Recent years have witnessed the rapid development of online auctions. Currently, some online auctions, such as eBay, introduce a proxy bidding policy, under which bidders submit their maximum bids and delegate to a proxy agent to automatically outbid other competitors for the top bidder, whereas other online auctions do not. This paper compares these two widely used auction mechanisms (proxy setting and non-proxy setting) and characterizes the equilibrium bidding behavior and the seller's expected revenue. We find the proxy auction outperforms the non-proxy auction in terms of the seller's expected revenue. This dominance result is not prone to the specific bid announcement policy, the bidder's knowledge regarding the number of bidders, the impact of traffic congestion along the bidding process, the number of items sold through the auction, and the existence of a reserve price.We further find that the proxy setting usually fails to sustain the truthful bidding as a dominant strategy equilibrium even if no minimum bid increments are adopted, and the possibility of a low-valuation-bidder dilemma where the low-valuation bidders could be better off if all bidders collude to bid at the last minute. We also discuss the dramatically different equilibrium bidding behaviors under the two auction mechanisms.     

Bidding strategies for real-life small loan auctions

We define and identify bidding strategies in real-life small loan auctions (Prosper.com). In such auctions, lenders bid for borrowers' loan listings and the winners get to fund the loan at an interest rate determined by the auction. The exceptionally large empirical database provided by Prosper.com offers a unique opportunity to test and further develop the theory of online auctions. This study shows that bidding behavior is not homogeneous among bidders, as the traditional auction theory suggests. Instead, bidders use many different bidding strategies. Moreover, learning and bidders' consistency over time in different auctions is studied.     

Strong activity rules for iterative combinatorial auctions

Activity rules have emerged in recent years as an important aspect of practical auction design. The role of an activity rule in an iterative auction is to suppress strategic behavior by bidders and promote simple, continual, meaningful bidding and thus, price discovery. These rules find application in the design of iterative combinatorial auctions for real world scenarios, for example in spectrum auctions, in airline landing slot auctions, and in procurement auctions. We introduce the notion of strong activity rules, which allow simple, consistent bidding strategies while precluding all behaviors that cannot be rationalized in this way. We design such a rule for auctions with budget-constrained bidders, i.e., bidders with valuations for resources that are greater than their ability to pay. Such bidders are of practical importance in many market environments, and hindered from bidding in a simple and consistent way by the commonly used revealed-preference activity rule, which is too strong in such an environment. We consider issues of complexity, and provide two useful forms of information feedback to guide bidders in meeting strong activity rules. As a special case, we derive a strong activity rule for non-budget-constrained bidders. The ultimate choice of activity rule must depend, in part, on beliefs about the types of bidders likely to participate in an auction event because one cannot have a rule that is simultaneously strong for both budget-constrained bidders and quasi-linear bidders.     

Bidding strategies in online single-unit auctions: Their impact and satisfaction

Online bidders use different strategies in their biddings. However, we are unsure of the bidders strategies and their effectiveness in achieving auction goals. Our study was an attempt to identify bidding strategies empirically in online single-unit auctions and evaluate their outcome in terms of cost saving, perceived bidder enjoyment, and bidder satisfaction. A research model was developed and used to examine the relationships. Both objective and subjective data of online single-unit auctions were collected from Taobao.com to validate our postulated hypotheses. We found three main bidding strategies: early, snipe, and agent-supported ratchet bidding based on their behavior patterns. These resulted in different levels of winning outcome and cost saving, but had no significant effect on perceived enjoyment. The hypotheses of the relationship between auction outcomes and bidder satisfaction of their bidding strategies were confirmed.     

Bidder's strategy under group-buying auction on the Internet

The group-buying auction is a new kind of dynamic pricing mechanism on the Internet. It is a variant of the sellers' price double auction, which makes the bidders as a group through Internet to get the volume discounts, i.e., the more bidders bid, the lower the price of the object being auctioned becomes. In this paper, we analyze the group-buying auction under some assumptions, such as that the independent private values (IPVs) model applies and bidders are risk neutral and symmetric, etc., and build an incomplete information dynamic game model to illustrate the bidders' bidding process. It proves that for the bidders there exists a weakly dominant strategy S, i.e., no matter when a bidder arrives at the auction and what the bidding history is, the highest permitted bid price that is no greater than his value to the object is always his optimal bid price but may not be the unique one.     

EFFECTS OF A RATIONING RULE ON THE AUSUBEL AUCTION: A GENETIC ALGORITHM IMPLEMENTATION

The increasing use of auctions as a selling mechanism has led to a growing interest in the subject. Thus both auction theory and experimental examinations of these theories are being developed. A recent method used for carrying out examinations on auctions has been the design of computational simulations. The aim of this article is to develop a genetic algorithm to find automatically a bidder optimal strategy while the other players are always bidding sincerely. To this end a specific dynamic multiunit auction has been selected: the Ausubel auction, with private values, dropout information, and with several rationing rules implemented. The method provides the bidding strategy (defined as the action to be taken under different auction conditions) that maximizes the bidder's payoff. The algorithm is tested under several experimental environments that differ in the elasticity of their demand curves, number of bidders and quantity of lots auctioned. The results suggest that the approach leads to strategies that outperform sincere bidding when rationing is needed.     

Bidding behavior in dynamic auction settings: An empirical analysis of eBay

We study the impact of dynamic environment of eBay auctions on bidding behavior. Due to high-speed Internet and practically costless search possibilities, bidding behavior is no longer a function of characteristics of a single auction but depends on auctions running simultaneously, completed auctions, available Buy-It-Now prices as well as various outside options. We study how this dynamic market affects a bidder’s choice of participating in an auction or leaving eBay for an outside alternative. We analyze Texas Instruments (TI-83) Graphing Calculator auctions presented on eBay. We estimate a random-effects probit model to study bidders’ probability of staying in eBay, while controlling for unobservable individual-specific heterogeneity. Our main result shows that Market Tightness – the ratio of bidders to sellers – has a negative and significant effect on bidders’ decision to remain in eBay. Moreover, variables containing information from other eBay auctions significantly affect bidders’ participation decision, thus emphasizing the importance of the dynamic, multi-auction environment in eBay marketplace for potential buyers.     

An experimental investigation into the effects of information revelation in multi-attribute reverse auctions

Bid-takers in multi-attribute reverse auctions (MRA) are typically confronted with a myriad of information revelation options and must make decisions on which pieces of information to reveal to bidders and which ones to conceal. This study explores how the choice of different types and combinations of information can affect bidding behaviour and bidder perceptions in MRA. The results of a computer-based laboratory experiment suggest that by reducing the level of information asymmetry and using certain combinations of information a bid-taker can reduce bidder drop-out and spur the submission of high quality bids, i.e. bids that yield high levels of utility for the bid-taker.     

Cheating in online auction – Towards explaining the popularity of English auction

Action frauds constitute largest part of all Internet frauds. Cheating is a kind of fraud that does not have direct evidences of its occurrence. We conduct theoretical studies as well as simulation experiments to find out the effect of cheating in three important types of auctions: English auction, first-price sealed-bid, and second-price sealed-bid auction. Our cheating environment consists of shill bidding, bid shading and false bidding in English, first-price and second-price auction, respectively. In the experiments ordinary bidders, bidders with the equilibrium bidding strategy, and cheaters compete with each other. Both theoretical and experimental results confirm that the equilibrium bidding strategies indeed increases the bidders’ expected utility. Therefore, it can be concluded that adoption of rational bidding strategies can combat cheating. It is found that most of the auction sites intuitively prefer English auction to other auction mechanisms. There is not much theoretical or experimental evidence to support such an intuition. We use honest bidder’s expected gain and honest seller’s revenue loss as a basis to compare these three important auctions types. The analysis of the results reveals English auction to be the most preferred mechanism from both honest buyer’s and honest seller’s point of view. This result can be used as an experimental evidence to explain the popularity of English auction over the Internet.     

Improving the Performance of Online Auctions Through Server-side Activity-based Caching

Online auction sites have very specific workloads and user behavior characteristics. Previous studies on workload characterization conducted by the authors showed that (1) bidding activity on auctions increases considerably after 90% of an auction’s life time has elapsed, (2) a very large percentage of auctions have a relatively low number of bids and bidders and a very small percentage of auctions have a high number of bids and bidders, (3) prices rise very fast after an auction has lasted more than 90% of its life time. Thus, if bidders are not able to successfully bid at the very last moments of an auction because of site overload, the final price may not be as high as it could be and sellers, and consequently the auction site, may lose revenue. In this paper, we propose server-side caching strategies in which cache placement and replacement policies are based on auction-related parameters such as number of bids placed or percent remaining time till closing time. A main-memory auction cache at the application server can be used to reduce accesses to the back-end database server. Trace-based simulations were used to evaluate these caching strategies in terms of cache hit ratio and cache efficiency. The performance characteristics of the best policies were then evaluated through experiments conducted on a benchmark online auction system.     

一个新的分布式安全电子拍卖协议

基于Shamir的（t＋1,n）门限方案和公钥加及数字签名提出一个适于分布式松耦合发布／预约系统使用的安全电子拍卖协议。协议除满足了安全分布式拍卖的基本需求外,还保证了代理拍卖服务器的不可否认性及投标者的匿名性。与先前工作相比,新协议具有较多的安全特性,而且更适合于分布式大规模拍卖。松耦合发布预约结构广泛使用于可扩展 自适应的分布式系统中,它的灵活性使之为许多应用所采用。但是,在不安全的通信环境中,这种结构缺乏容错性和安全支持,新协议可以在分布式松耦合发布／预约系统中实现安全性和容错性,同时具有适当的运行效率。最后,我们对协议设计的正确性和效率进行了详尽分析。     

Distributed ascending proxy auction — A cryptographic approach

In recent years, auctions have become a very popular price discovery mechanism in the Internet. The common auction formats are typically centralized in nature. The peer-to-peer paradigm demands gearing up auctions for decentralized infrastructures. In this context, this paper proposes a distributed mechanism for ascending second-price auctions that relies on standard cryptographic algorithms. In essence, the auction protocol has the capability of preserving the privacy of the winning bidder’s true valuation. The auction protocol makes use of a high number of auctioneers divided into several groups. A bidder creates an encrypted chain of monotonously increasing bidding steps, where each bidding step can be decrypted by a different auctioneer group. This considerably reduces the attack and manipulation possibilities of malicious auctioneers. In addition, this secure approach does not require bidders to be online unless they are submitting their bid chain to the auctioneers.     

Maximizing sellers’ welfare in online auction by simulating bidders’ proxy bidding agents

This paper presents an agent-based simulation model to estimate the effects of auction parameters on the auction outcomes, and to find an optimal or, at least, a near-optimal infrastructure. In particular, this study intends to study how bidders’ personalities and bidding strategies with other auction parameters affect the closing prices in two auction mechanisms: English and Yankee auction. Experimental results show that the aggregated outcome of multiple English auctions is more favorable to auctioneers and sellers than that of a corresponding single Yankee auction. It is also shown that raising minimum bid increment or bid starting price positively affects the closing prices in both auction types. However, two auction systems respond differently to the changes in parameter values in terms of magnitude and robustness. Further, it is noted that the closing price of an auction is negatively related to the proportion of risk-takers who adopt sniping strategy to submit their bids. As the proportion of risk-takers increases, the closing price significantly decreases in hard-ending auctions (eBay-like system), but only marginally in soft-ending auctions (Amazon-like system). In particular, soft-ending auctions with less snipers and a longer time window of automatic extension return the most favorable closing price to sellers.     

一个基于知识证明签名的安全电子拍卖协议

论文研究了英式电子拍卖协议,基于知识证明签名给出一个安全有效的电子拍卖协议。该协议实现了竞拍者身份的匿名性、获胜竞拍者的不可否认性、可公开验证性、竞拍者不可伪装性、可跟踪同一拍卖中某竞拍者的投标以及某个竞拍者在不同拍卖中不可关联性等问题。论文的工作重点是引入了可信第三方并利用知识证明签名来解决其它协议中撤消竞拍者的问题,可简单地撤消某个竞拍者并保证拍卖的高效率。另外,本文还给出了避免拍卖管理者的不公正性的改进协议。     

Real-time detection of shill bidding in online auctions: A literature review

Online auctions have become an increasingly popular and convenient way for conducting ecommerce transactions on the Web. However, the rapid surge of users participating in online auctions has led to auction fraud. Among the types of auction fraud, the most prominent is Shill bidding. Shill bidding is intentionally fake bidding by a seller on his/her own auction to inflate the final price. This can be accomplished either by the seller himself/herself or by someone colluding with the seller to place fake bids on his/her behalf. Therefore, it is difficult to manually investigate the large amount of auctions and bidders for shill bidding activities. Detecting shill bidding in real-time is the most effective way to reduce the loss result of the auction fraud. Researchers have proposed multiple approaches and experimented to control the losses incurred due to shill bidding. This paper investigates the real-time detection techniques of shill bidding. It also provides a brief overview of major work that has been conducted in shill bidding detection including both offline and real-time approaches. Furthermore, this paper identifies research gaps in the detection and prevention of shill bidding behaviours. It also provides future research issues and challenges to detect shill bidding in real-time.     

Should we collude? Analyzing the benefits of bidder cooperation in online group-buying auctions

Cooperation among bidders in traditional auctions is typically forbidden. This is because it is viewed as being harmful to the interests of sellers, who hope to obtain fair prices for their sale items. It also may be harmful to other bidders who are not able to take advantage of any cooperation that is occurring. In online group-buying auctions, in contrast to traditional auctions, cooperation results in higher welfare, leading to market expansion that benefits buyers and sellers, as well as the auction intermediary. This has not been well understood in prior research, however. In this article, we show how the online group-buying auction mechanism on the Internet can be effectively enhanced to produce higher welfare for the participants. The key to achieving this, we find, is for the auction intermediary to provide a means for bidders to cooperate, so as to collectively express greater demand. Such cooperation, it turns out, permits the group-buying auction mechanism to dominate the fixed-price mechanism from the seller’s point of view under some circumstances. Through an analytical modeling analysis, we offer insights into how sellers can set their group-buying auction price curves more effectively, so as to take advantage of bidder cooperation to improve auction performance. We further argue that the goal of the auction intermediary should be to offer an information sharing mechanism to facilitate bidding ring formation, as a means to maximize the value of this market mechanism.