Can priced options solve the exposure problem in sequential auctions?

Authors:
Lonneke Mous;Valentin Robu;Han La Poutré
Affiliations:
CWI, Dutch National Research Center for Mathematics and Computer Science, SJ Amsterdam, The Netherlands;CWI, Dutch National Research Center for Mathematics and Computer Science, SJ Amsterdam, The Netherlands;CWI, Dutch National Research Center for Mathematics and Computer Science, SJ Amsterdam, The Netherlands
Venue:
ACM SIGecom Exchanges
Year:
2008

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Abstract

The exposure problem appears whenever an agent with complementary valuations bids to acquire a bundle of items sold sequentially, in independent auctions. In this letter, we review a possible solution that can help solve this problem, which involves selling options for the items, instead of the items themselves. We provide a brief overview of the state of the art in this field and discuss, based on recent results presented in [Mous et. al. 2008], under which conditions using option mechanisms would be desirable for both buyers and sellers, by comparison to direct auctioning of the items. The paper concludes with a brief discussion of further research directions in this field.