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Models for Iterative Multiattribute Procurement Auctions

Author

Listed:
  • David C. Parkes

    () (Division of Engineering and Applied Sciences, Harvard University, 229 Maxwell-Dworkin, 33 Oxford Street, Cambridge, Massachusetts 02138)

  • Jayant Kalagnanam

    () (IBM Research Division, T. J. Watson Research Center, P.O. Box 218, Yorktown Heights, New York 10598)

Abstract

Multiattribute auctions extend traditional auction settings to allow negotiation over nonprice attributes such as weight, color, and terms of delivery, in addition to price and promise to improve market efficiency in markets with configurable goods. This paper provides an iterative auction design for an important special case of the multiattribute allocation problem with special (preferential independent) additive structure on the buyer value and seller costs. Auction Additive&Discrete provides a refined design for a price-based auction in which the price feedback decomposes to an additive part with a price for each attribute and an aggregate part that appears as a price discount for each supplier. In addition, this design also has excellent information revelation properties that are validated through computational experiments. The auction terminates with an outcome of a modified Vickrey-Clarke-Groves mechanism. This paper also develops Auction NonLinear&Discrete for the more general nonlinear case---a particularly simple design that solves the general multiattribute allocation problem, but requires that the auctioneer maintains prices on bundles of attribute levels.

Suggested Citation

  • David C. Parkes & Jayant Kalagnanam, 2005. "Models for Iterative Multiattribute Procurement Auctions," Management Science, INFORMS, vol. 51(3), pages 435-451, March.
  • Handle: RePEc:inm:ormnsc:v:51:y:2005:i:3:p:435-451
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    File URL: http://dx.doi.org/10.1287/mnsc.1040.0340
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    References listed on IDEAS

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    6. Damian R. Beil & Lawrence M. Wein, 2003. "An Inverse-Optimization-Based Auction Mechanism to Support a Multiattribute RFQ Process," Management Science, INFORMS, vol. 49(11), pages 1529-1545, November.
    7. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September.
    8. Fernando Branco, 1997. "The Design of Multidimensional Auctions," RAND Journal of Economics, The RAND Corporation, vol. 28(1), pages 63-81, Spring.
    9. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Li, Zhaolin & Ryan, Jennifer K. & Sun, Daewon, 2015. "Multi-attribute procurement contracts," International Journal of Production Economics, Elsevier, vol. 159(C), pages 137-146.
    2. Pickl, Matthias & Wirl, Franz, 2011. "Auction design for gas pipeline transportation capacity--The case of Nabucco and its open season," Energy Policy, Elsevier, vol. 39(4), pages 2143-2151, April.
    3. Pham, Long & Teich, Jeffrey & Wallenius, Hannele & Wallenius, Jyrki, 2015. "Multi-attribute online reverse auctions: Recent research trends," European Journal of Operational Research, Elsevier, vol. 242(1), pages 1-9.
    4. Papakonstantinou, Athanasios & Bogetoft, Peter, 2017. "Multi-dimensional procurement auction under uncertain and asymmetric information," European Journal of Operational Research, Elsevier, vol. 258(3), pages 1171-1180.
    5. Shachat, Jason, 2009. "Procuring Commodities: Request for Quote or Reverse Auctions?," MPRA Paper 13418, University Library of Munich, Germany.
    6. Dimitris Kostamis & Damian R. Beil & Izak Duenyas, 2009. "Total-Cost Procurement Auctions: Impact of Suppliers' Cost Adjustments on Auction Format Choice," Management Science, INFORMS, vol. 55(12), pages 1985-1999, December.
    7. Cheng, Meng & Xu, Su Xiu & Huang, George Q., 2016. "Truthful multi-unit multi-attribute double auctions for perishable supply chain trading," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 93(C), pages 21-37.
    8. Wang, Hong, 2013. "Contingent payment auction mechanism in multidimensional procurement auctions," European Journal of Operational Research, Elsevier, vol. 224(2), pages 404-413.
    9. repec:spr:grdene:v:21:y:2012:i:1:d:10.1007_s10726-009-9186-6 is not listed on IDEAS
    10. Gregory E. Kersten & Tomasz Wachowicz & Margaret Kersten, 2016. "Competition, Transparency, and Reciprocity: A Comparative Study of Auctions and Negotiations," Group Decision and Negotiation, Springer, vol. 25(4), pages 693-722, July.
    11. Jain, Vipul & Panchal, Gajanan B. & Kumar, Sameer, 2014. "Universal supplier selection via multi-dimensional auction mechanisms for two-way competition in oligopoly market of supply chain," Omega, Elsevier, vol. 47(C), pages 127-137.
    12. Jason Shachat & Lijia Wei, 2012. "Procuring Commodities: First-Price Sealed-Bid or English Auctions?," Marketing Science, INFORMS, vol. 31(2), pages 317-333, March.
    13. Benjamin Blau & Clemens Dinther & Tobias Conte & Yongchun Xu & Christof Weinhardt, 2009. "How to Coordinate Value Generation in Service Networks," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 1(5), pages 343-356, October.
    14. de Weerdt, Mathijs M. & Harrenstein, Paul & Conitzer, Vincent, 2014. "Strategy-proof contract auctions and the role of ties," Games and Economic Behavior, Elsevier, vol. 86(C), pages 405-420.
    15. Papakonstantinou, A. & Bogetoft, P., 2013. "Crowd-sourcing with uncertain quality - an auction approach," MPRA Paper 46055, University Library of Munich, Germany.
    16. Jens Leth Hougaard & Kurt Nielsen & Athanasios Papakonstantinou, 2016. "A Sealed-Bid Two-Attribute Yardstick Auction Without Prior Scoring," Group Decision and Negotiation, Springer, vol. 25(4), pages 827-843, July.
    17. Bogetoft, Peter & Nielsen, Kurt, 2008. "DEA based auctions," European Journal of Operational Research, Elsevier, vol. 184(2), pages 685-700, January.
    18. Wedad J. Elmaghraby & Elena Katok & Natalia Santamaría, 2012. "A Laboratory Investigation of Rank Feedback in Procurement Auctions," Manufacturing & Service Operations Management, INFORMS, vol. 14(1), pages 128-144, January.
    19. Kameshwaran, S. & Narahari, Y. & Rosa, Charles H. & Kulkarni, Devadatta M. & Tew, Jeffrey D., 2007. "Multiattribute electronic procurement using goal programming," European Journal of Operational Research, Elsevier, vol. 179(2), pages 518-536, June.
    20. Papakonstantinou, A. & Bogetoft, P., 2012. "Multi-dimensional auctions under information asymmetry for costs and qualities," MPRA Paper 43563, University Library of Munich, Germany.
    21. repec:wyi:journl:002158 is not listed on IDEAS
    22. Butler, John C. & Dyer, James S. & Jia, Jianmin & Tomak, Kerem, 2008. "Enabling e-transactions with multi-attribute preference models," European Journal of Operational Research, Elsevier, vol. 186(2), pages 748-765, April.
    23. Huang, Min & Qian, Xiaohu & Fang, Shu-Cherng & Wang, Xingwei, 2016. "Winner determination for risk aversion buyers in multi-attribute reverse auction," Omega, Elsevier, vol. 59(PB), pages 184-200.

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