Why did you start AuctionBot?

We had been building auction technology for some time...And we thought why not take the stuff that we had been building and put it on the Net? Both for ourselves and to make it available to others.

As we were doing it we started seeing some auction activity emerging...We were aware of OnSale.com, which was used to auction off remaindered computer goods. One of our ideas on getting this out there was that maybe disinterested 3rd parties should be running Internet auctions. It was just a few weeks before we were about to release our system that we noticed eBay had gotten a foothold and was doing something fairly similar.

In addition to our motivation of providing a model of the neutral 3rd party auction, we were also interested in showing that there's more than one way to run an auction. Everybody has the stereotypical view of auctions as one of several scenarios. Either the well dressed person at the big podium with a gavel with fine art raising the bids or maybe some fast talking person and cattle streaming by. But those are only stereotypes. The kinds of of things that constitute auctions are actually much broader.

Basically, any kind of process where the parties that might be interested in making a deal will present some kind of indication of the kinds of deals they are willing to participate in. As a result of those indications the auctioneer will reveal some information, say what the going price might be at some time. And eventually, as the result of some further bids or offers that the participants submit, they will reach some conclusion as to what the deal is. By that definition, something like a stock market trading pit is an auction. Sealed bid procedures that are very common in some forms of contracting are also forms of auctions. We wanted to provide a platform where people could try out whatever form of auction seemed right for their circumstances.

Economists have studied auctions for a long period of time. And to summarize quite a large body of interesting work, the main conclusion is that one size doesn't fit all. And actually what action is appropriate depends a lot on the circumstances.

It wasn't clear to us what kind of auction right kind for the Internet. And in fact we thought there wasn't one right kind. But we thought the natural development of companies running auctions on the Internet would be to put up the first thing the lay person thinks of as an auction. And in fact, that's what has happened in the consumer oriented market.

How did people react to AuctionBot?

It took us a little while before we provided a streamlined auction creation button that let people bypass most of those options. And that is by far the most popular choice.

Nevertheless, the configurability is something that we have, for our research interests, pushed on the most. For special customized markets, it may very well be worth spending a few hours to figuring out what are the right rules and incentives. And if a market is important enough and repeated enough and the stakes are high enough, then the traders will also care that the rules are right and will be willing to invest the time in learning the rules and tailoring their strategies to those rules.

What are some examples of specialized auctions?

What makes auctions so popular on the Internet?

By anyone's measure, the fraction of transactions that occur by auction as opposed to fixed price schemes on the Internet is much higher than in the world as a whole.

The thing that auctions provide is dynamic pricing...The fixed price system is very inflexible. If it turns out that the seller is wrong about that price then some major opportunities have been missed. So a dynamic pricing scheme lets the uncertainty about who is willing to do what be determined by a process.

In the non-Internet world it's fairly complicated to organize an auction. You've got to get everyone who might be interested in one place or together at the same time, say on the phone. Of course, that's what the Internet lets you do. Just by being a network it lets people who are in different places interact together. What I think is even a more significant advantage is that it lets people who are on different schedules interact together...

What kinds of transactions have you seen on Auctionbot?

What are some examples of ways your research could help people in consumer auctions?

Say you want to buy something like a computer monitor. You can go to various auction sites and bid on a computer monitor. But actually there are auctions for 20 computer monitors at any one time. Not just at one site, but at many other sites. How should a participant coordinate their behavior? Should you bid in one auction and go away and see what happens? Or should you monitor several at once? You want to be careful not to have bids outstanding in more than one that could potentially win. You probably don't want two monitors. But maybe sometimes it is worth taking that risk. So either finding new mechanisms that can somehow coordinate multiple auctions at once, or providing more decision support to traders is a very important issue.

Can someone from outside still set up an auction on AuctionBot?

Yes...The reason that we don't have a lot of people doing it is that if you want to sell something you want to go where the buyers are and if you want to buy something you want to go where the sellers are and there is this threshold affect.

What it would be good for is if someone whats to hold a private auction. If they have some community that wants to participate and they can handle the publicity.

Were you surprised at the sucess of eBay?

What we like to say is that since we anticipated in 1995 when there was no Internet auction activity that this would be a huge deal we were able to capture 1/10,000 of 1 percent of the market share.

Actually, we do think we were right about that. So we're not really suprized that its become a big deal. The fact that it's so fast and the fact that the market capitalizations in the stock market are rather eyebrow raising has suprised us. But the fact that auctions have turned out to be a major mode of commerce is not a surprise.

What types of markets are good for Internet auctions?

This is probably going with conventional wisdom now adays. The major sector of extension is going to be in the business to business area. That's an area in which it will make sense to have more customized market rules that maybe match the practices of particular industries...

How dramatically has the Internet increased the popularity of auctions?

Do you do experiments with automated trading agents on AuctionBot?

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