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Category: Business and Industry
Date Submitted: 10/20/2014 06:53 PM
Quality in Supply Chain Design Auctions for Supply Chain
Outline
Effective Auction Design Single Object Multiple Homogeneous Objects
Combinatorial Auctions
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Effective Auction Design: Auction Defined (Wellman 2007)
Most influential and widely studied topics in economics over the last forty years Ask and answer the most fundamental questions in economics:
Who should get the goods and at what prices?
Provide the micro-foundation of markets Many modern markets are organized as auctions
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Effective Auction Design: Auction Defined (Wellman 2007)
Any negotiation process that is: Mediated Well-specified (runs according to explicit rules: a mechanism) Market-based (determines an exchange in terms of standard currency)
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Effective Auction Design: Auction Classification
Rules of the auction,
such as ascending versus sealed bid
Auction environments
numbers of sellers and buyers number of items being traded preferences of the parties
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Effective Auction Design: Private Value Model (Vickrey) Benchmark environment:
Each bidder has a value for each package of items These values do not depend on the private information of the other bidders Each bidder knows his values, but not the values of the other bidders Example…
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Effective Auction Design: Challenge
Answer the most fundamental question:
Who should get the goods and at what prices? In a strategic environment
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Effective Auction Design: Two Fundamental Prescriptions
Price paid by a player is as independent as possible of her own bids (William Vickrey, 1961)
Ideally, the winner’s price should depend solely on opposing participants’ bids—as in the sealed-bid, second-price auction—so that each participant has full incentive to truthfully reveal her value.
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Effective Auction Design: Two Fundamental Prescriptions Cont.
Structured in an open fashion that maximizes the information made available to each...