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Maximizing bidder surplus in simultaneous online art auctions via dynamic forecasting

  • Dass, Mayukh
  • Jank, Wolfgang
  • Shmueli, Galit
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    This paper presents a novel intelligent bidding system, called SOABER (Simultaneous Online Auction BiddER), which monitors simultaneous online auctions of high-value fine art items. It supports decision-making by maximizing bidders' surpluses and their chances of winning an auction. One key element of the system is a dynamic forecasting model, which incorporates information about the speed of an auction's price movement, as well as the level of competition both within and across auctions. Other elements include a wallet estimator, which gauges the bidders' willingness to pay, and a bid strategizer, which embeds the forecasting model into a fully automated decision system. We illustrate the performance of our intelligent bidding system on an authentic dataset of online art auctions for Indian contemporary art. We compare our system with several simpler ad-hoc approaches, and find it to be more effective in terms of both the extracted surplus and the resulting winning percentage.

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    Article provided by Elsevier in its journal International Journal of Forecasting.

    Volume (Year): 27 (2011)
    Issue (Month): 4 (October)
    Pages: 1259-1270

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    Handle: RePEc:eee:intfor:v:27:y:2011:i:4:p:1259-1270
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    1. Michael H. Rothkopf & Aleksandar Peke\v{c} & Ronald M. Harstad, 1998. "Computationally Manageable Combinational Auctions," Management Science, INFORMS, vol. 44(8), pages 1131-1147, August.
    2. Chanel, O. & Gerard, L.A. & Ginsburgh, V., 1992. "The Relevence of Hedonic Price Indices the Case of Paintings," G.R.E.Q.A.M. 92a19, Universite Aix-Marseille III.
    3. Zhang, Shu & Jank, Wolfgang & Shmueli, Galit, 2010. "Real-time forecasting of online auctions via functional K-nearest neighbors," International Journal of Forecasting, Elsevier, vol. 26(4), pages 666-683, October.
    4. Milgrom, Paul, 1998. "Game theory and the spectrum auctions," European Economic Review, Elsevier, vol. 42(3-5), pages 771-778, May.
    5. David Lucking-Reiley & Doug Bryan & Naghi Prasad & Daniel Reeves, 2007. "PENNIES FROM EBAY: THE DETERMINANTS OF PRICE IN ONLINE AUCTIONS -super-* ," Journal of Industrial Economics, Wiley Blackwell, vol. 55(2), pages 223-233, 06.
    6. Anthony M. Kwasnica & Katerina Sherstyuk, 2007. "Collusion and Equilibrium Selection in Auctions," Economic Journal, Royal Economic Society, vol. 117(516), pages 120-145, 01.
    7. Alvin E. Roth & Axel Ockenfels, 2002. "Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet," American Economic Review, American Economic Association, vol. 92(4), pages 1093-1103, September.
    8. Jianping Mei & Michael Moses, 2002. "Art as an Investment and the Underperformance of Masterpieces," American Economic Review, American Economic Association, vol. 92(5), pages 1656-1668, December.
    9. Wang, Shanshan & Jank, Wolfgang & Shmueli, Galit, 2008. "Explaining and Forecasting Online Auction Prices and Their Dynamics Using Functional Data Analysis," Journal of Business & Economic Statistics, American Statistical Association, vol. 26, pages 144-160, April.
    10. Srabana Gupta, 2002. "Competition and collusion in a government procurement auction market," Atlantic Economic Journal, International Atlantic Economic Society, vol. 30(1), pages 13-25, March.
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