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Shill Bidding In Online English Auctions With A Random Number Of Bidders

Author

Listed:
  • JUN MA

    (School of Management, University of International Business and Economics, Beijing 100029, China)

  • SHOUYANG WANG

    (Institute of Systems Science, Academy of Mathematics and Systems Sciences, Chinese Academy of Sciences, Beijing 100080, China;
    College of Business Administration, Hunan University, Changsha, Hunan 410082, China)

  • K. K. LAI

    (Department of Management Sciences, City University of Hong Kong, Tat Chee Avenue, Kowloon, Hong Kong, China)

Abstract

Shill bidding has increased substantially with the explosion in the number of online auctions. For English auctions with conventional intermediation fee schedules and a continuous increment of the bid, sellers may profit from shill bidding, which is illegal. To deter shill bidding, Wanget al.31designed a mechanism — the shill-deterrent fee schedule (SDFS) which makes shill bidding unprofitable. This paper analyzes the feasibility of applying SDFS rules to both single round and multi-round English auctions in a framework of independent private value (IPV) with a random number of bidders. It is shown that most of the results in Wanget al.31remain true at our cases. In addition, we also propose an approach for sellers to reset the subsequent reserves in multi-round English auctions.

Suggested Citation

  • Jun Ma & Shouyang Wang & K. K. Lai, 2004. "Shill Bidding In Online English Auctions With A Random Number Of Bidders," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 3(04), pages 539-562.
    • Handle: RePEc:wsi:ijitdm:v:03:y:2004:i:04:n:s0219622004001239
    DOI: 10.1142/S0219622004001239
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    References listed on IDEAS

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    1. Indranil Chakraborty & Georgia Kosmopoulou, 2004. "Auctions with shill bidding," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 24(2), pages 271-287, August.
    2. Alvin E. Roth & Axel Ockenfels, 2000. "Last Minute Bidding and the Rules for Ending Second-Price Auctions: Theory and Evidence from a Natural Experiment on the Internet," NBER Working Papers 7729, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Zhen Li & Ching-Chung Kuo, 2013. "Design of discrete Dutch auctions with an uncertain number of bidders," Annals of Operations Research, Springer, vol. 211(1), pages 255-272, December.

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