A Descriptive Auction Language

Abstract

Electronic markets and especially online auctions gain more and more importance and a plethora of market mechanisms is emerging on the Internet. The great variety of trading rules hinders agents easily switching between different marketplaces and, therefore, fragments the overall market – supply and demand might fail to meet due to agents' inability to interact with the same market mechanism. The problem can be overcome by a descriptive auction language (DAL) allowing for the machine‐readable specification of arbitrary auction mechanisms. The implications are twofold: on the one hand a market engineer can coherently describe a mechanism by means of the language and automatically deploy it via an auction runtime environment and, on the other hand, a (software) agent can automatically deduce valid and reasonable actions from the description of a previously unknown auction mechanism.

All four authors are affiliated with the Institute of Information Systems and Management in the School of Economics and Business Engineering at the University of Karlsruhe, Germany.

Keywords:

• auctions
• trading software agents
• Internet economics
• market engineering
• e‐commerce
• e‐business

ACKNOWLEDGEMENTS

This research was partially funded by the German Federal Ministry of Education and Research (BMBF) in the SESAM‐project as part of the research program Internet Economics and by the German Research Foundation (DFG) within the scope of the Graduate School ‘Information Management and Market Engineering’ (IME). The authors are responsible for the content of this publication.

Notes

All four authors are affiliated with the Institute of Information Systems and Management in the School of Economics and Business Engineering at the University of Karlsruhe, Germany.

1. The validation for an English auction could require every new bid to beat the standing highest one. We presume for our example that the one validation for both the FPSB and the English auction example accepts any bid without price restrictions. Nevertheless, if the new bid does not exceed the high bid, it has no chance of winning the auction.