Vecon Lab Reverse Reference Price Auction: Introduction

This program sets up a reverse auction in which the bidders are given roles of sellers of items with diverse values, e.g. different tracts of land for conservation or different securities. These items can be retained or sold to a large buyer who has set aside funds for such purchases. In order to enhance competition and reduce the required number of auctions, the buyer may structure auctions that cover a number of closely related items. Differences in the intrinsic values of the items being purchased at auction necessitates the use of some metric to compare bids. This metric is provided by "reference prices" that are used to normalize bids. The buyer has a target budget amount to be spent. In a combined auction, submitted bids are ranked from low to high based on ratios of bids to reference prices, and bids with low ratios are included until the fixed budget is exhausted. Several possible auction methods are available on setup, e.g. discriminatory or uniform price. Bidders may have either private "keep values," or they may be given signals concerning unobserved common values for each item being sold.

Vecon Lab - June 3, 2020