Monte Carlo approximation in incomplete information, sequential auction games
Decision Support Systems - Special issue: Decision theory and game theory in agent design
Designing online auctions with past performance information
Decision Support Systems
Impact of ending rules in online auctions: the case of yahoo.com
Decision Support Systems
Allocating online advertisement space with unreliable estimates
Proceedings of the 8th ACM conference on Electronic commerce
The effects of proxy bidding and minimum bid increments within eBay auctions
ACM Transactions on the Web (TWEB)
Online Auction and List Price Revenue Management
Management Science
Bidding for Representative Allocations for Display Advertising
WINE '09 Proceedings of the 5th International Workshop on Internet and Network Economics
Ex Ante Information and the Design of Keyword Auctions
Information Systems Research
Optimal mediated auctions with endogenous participation
Decision Support Systems
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Recent years have witnessed the rapid development of online auctions. Currently, some online auctions, such as eBay, introduce a proxy bidding policy, under which bidders submit their maximum bids and delegate to a proxy agent to automatically outbid other competitors for the top bidder, whereas other online auctions do not. This paper compares these two widely used auction mechanisms (proxy setting and non-proxy setting) and characterizes the equilibrium bidding behavior and the seller's expected revenue. We find the proxy auction outperforms the non-proxy auction in terms of the seller's expected revenue. This dominance result is not prone to the specific bid announcement policy, the bidder's knowledge regarding the number of bidders, the impact of traffic congestion along the bidding process, the number of items sold through the auction, and the existence of a reserve price. We further find that the proxy setting usually fails to sustain the truthful bidding as a dominant strategy equilibrium even if no minimum bid increments are adopted, and the possibility of a low-valuation-bidder dilemma where the low-valuation bidders could be better off if all bidders collude to bid at the last minute. We also discuss the dramatically different equilibrium bidding behaviors under the two auction mechanisms.