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Chinese Journal of Management Science ›› 2013, Vol. 21 ›› Issue (6): 132-138.

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Research on Multi-attribute English Auction based on Power Utility functions

YAO Sheng-bao   

  1. School of Business Administration, Zhongnan University of Economics and Law, Wuhan 430073, China
  • Received:2011-10-08 Revised:2012-07-20 Online:2013-12-29 Published:2013-12-23

Abstract: In this paper,multi-attribute auction is studied in the context of procurement. The considered auction problem has the following two characteristics. One is that the auction contains any finite attributes,conother one is that the utility functions of the auctioneer and the bidders are additive power functions. Firstly, a multi-attribute English auction is designed in which the auctioneer announce the scoring function in advance and the bidders submit bids one by one. Secondly, the optimal bidding strategy of the bidders is analyzed based on the assumption that bidders are symmetry. The optimal bidding price and the optimal values of the non-price attributes are determined. Thirdly, it is proved that the bidder with the lowest cost will win at last only if the minimal increment is small enough. Furthermore, the winning bid can be predicted. At last, the expected payoff of the buyer in the proposed auction is estimated. From the buyer's point of view, the optimal values of the announced weights of the scoring function are calculated.

Key words: multi-attribute auction, auction mechanism, bidding strategy, optimal auction.

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