Abstract
An ascending-bid auction protocol with a fixed end time has been widely used in many Internet auction sites. In such auctions, we can observe bidders’ behavior called last minute bidding, namely, a large fraction of bids are submitted in the closing seconds of the auction. This may cause a problem of information revelation failure as well as a problem of the server’s overload and network congestion. If almost all bids are submitted only during the last minute, each bidder cannot obtain information about the good through others’ bidding behavior, which will spoil the advantage of open-bid auctions. This results in having an inefficient allocation of the good. To solve this problem, we propose a new protocol that gives bidders an incentive to fix the maximum bid of a proxy agent. We examine the property of the protocol by using game theory and clarify which situations our protocol outperforms the existing protocol by using a computer simulation.
