U.S. patent application number 13/213972 was filed with the patent office on 2011-12-08 for auction methods and systems.
Invention is credited to William Y. Conwell.
Application Number | 20110301964 13/213972 |
Document ID | / |
Family ID | 38576651 |
Filed Date | 2011-12-08 |
United States Patent
Application |
20110301964 |
Kind Code |
A1 |
Conwell; William Y. |
December 8, 2011 |
Auction Methods and Systems
Abstract
Known auction techniques are modified to provide various
benefits. In one arrangement, a pseudo-random function is employed
to determine whether a nominally-ended auction should be extended,
allowing an unsuccessful remorseful bidder a possible further
chance to win the auction. A variety of other features and
arrangements are also detailed.
Inventors: |
Conwell; William Y.;
(Portland, OR) |
Family ID: |
38576651 |
Appl. No.: |
13/213972 |
Filed: |
August 19, 2011 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
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11733094 |
Apr 9, 2007 |
8005746 |
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13213972 |
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60790676 |
Apr 10, 2006 |
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Current U.S.
Class: |
705/1.1 ;
705/400 |
Current CPC
Class: |
G06Q 30/08 20130101;
G06Q 30/0283 20130101; G06Q 30/0275 20130101; G06Q 40/04
20130101 |
Class at
Publication: |
705/1.1 ;
705/400 |
International
Class: |
G06Q 30/00 20060101
G06Q030/00; G06Q 90/00 20060101 G06Q090/00 |
Claims
1. In an auction method that includes receiving at least one bid
from a bidder, and awarding a subject of the auction to a winning
bidder, an improvement comprising: declaring a nominal end to the
auction, and executing on a computer system an algorithmic
function--unknowable to any bidder prior to said nominal end--to
determine whether to continue the auction for a further phase
beyond said nominal end.
2. The method of claim 1 in which said function includes a
pseudo-random factor.
3. The method of claim 2 wherein said function depends on a
circumstance in addition to said pseudo-random factor.
4. The method of claim 1 wherein said determination is made at or
following the nominal end of the auction.
5. The method of claim 1 wherein only parties who bid in the
auction prior to the nominal end thereof are permitted to bid
during a further phase thereof.
6. The method of claim 1 in which a further phase of the auction
may be followed by a yet-further phase of the auction, depending on
a circumstance.
7. The method of claim 6 in which said circumstance has a
pseudo-random aspect.
8. The method of claim 1 in which, in a further phase of said
auction, bidding continues from a bid prevailing at the nominal end
of the auction.
9. The method of claim 1 in which, in a further phase of said
auction, bidding continues from a bid other than that prevailing at
the nominal end of the auction.
10. The method of claim 1 in which a further phase of the auction
is started at a later time, rather than immediately following the
nominal end of the auction.
11. The method of claim 10 in which the later time is determined by
reference to a process that includes a pseudo-random factor.
12. The method of claim 1 in which a winning bidder at the nominal
end of the auction is given a benefit if the auction is continued
with a further phase.
13. The method of claim 12 in which the benefit includes a discount
on an otherwise applicable commission, if a winning bidder at the
nominal end of the auction is also the winning bidder in the
further phase of said auction.
14. The method of claim 12 in which said winning bidder is given a
benefit only if that bidder enters a bid, during a further phase of
said auction, which is better than a best bid at the nominal end of
the auction.
15. The method of claim 1 that further comprises: Also conducting a
second auction otherwise similar to the first auction but not
according to the method of claim 1; and charging a discounted
commission in the first auction relative to the second.
16. In an auction method that includes receiving bids from bidders,
and eventually awarding a subject of the auction to a winning
bidder, an improvement comprising: declaring a nominal end to the
auction, and conducting a second phase of said auction if a losing
bidder offers consideration within a window of time following said
nominal end to the auction, said window of time being assessed by a
hardware apparatus.
17. The method of claim 16 wherein said consideration comprises a
cash payment, and part of said cash payment is awarded to a bidder
who was winning at the nominal end of the auction.
Description
RELATED APPLICATION DATA
[0001] This application is a division of application Ser. No.
11/733,094, filed Apr. 9, 2007 (now U.S. Pat. No. 8,005,746), which
claims priority to provisional application 60/790,676, filed Apr.
10, 2006.
TECHNICAL FIELD
[0002] The present technology relates to auctions. In some
embodiments, the technology addresses issues of bidder's remorse
and seller's remorse.
BACKGROUND
[0003] The technology detailed herein is applicable to all manner
of auctions. The four most familiar styles of auction are the
ascending-bid auction (also called the English auction), the
descending-bid auction (also called the Dutch auction), the
first-price sealed-bid auction, and the second-price sealed bid
auction (also called the Vickrey auction). However, the present
concepts are applicable in all types of auction arrangements,
including those detailed in the following patent publications: U.S.
Pat. Nos. 5,794,207, 6,216,114, 6,466,917, 6,606,607, 6,671,674,
6,892,186, 6,985,885, 7,162,446, 20040128224, 20050228736, and
20050234806.
[0004] This technology is applicable in traditional live auctions,
and in on-line auctions like EBay. (Such auctions are familiar,
e.g., in the context of selling collectables, real estate,
commodities, thoroughbred horses and farm stock, used automobiles,
timber, etc.) Moreover, this technology is applicable in automated
auctions, and in auctions that are employed as mediation processes
to arbitrate entitlement to limited resources. (Such auctions
include automatically allocating dynamic packet bandwidth
assignments, trading electricity, allocating pollution rights,
selling debt instruments and financial securities, etc.) Such
principles can similarly be included in simultaneous multiple-round
auctions of the sort employed by the US Federal Communications
Commission in their spectrum auctions, as well as in other
combinatorial auctions.
[0005] Moreover, the principles herein can be applied to
traditional auctioneer-seller auctions (in which one or more
sellers seek a highest price for goods or services from bidders who
wish to obtain same), and in procurement, auctioneer-buyer auctions
(in which one or more buyers seek a lowest price for goods/services
from bidders who wish to provide same). Still further, the detailed
arrangements are applicable both in private auctions (where the
identities of the bidders are hidden) and in public auctions.
BRIEF DESCRIPTION OF THE DRAWINGS
[0006] FIGS. 1-4 detail illustrative arrangements of the
presently-described technology.
DETAILED DESCRIPTION
[0007] For expository convenience, the following discussion focuses
on the case of an ascending bid live auction. However, it will be
recognized that this is exemplary only, and that the principles can
likewise be applied to the other forms and types of auctions.
[0008] In one method an auction proceeds in the normal fashion.
However, at the nominal end of the auction--when the auctioneer
hammers the lot closed--the hammer does not necessarily signal the
true end of the auction. Instead, it stops a fast clock that has
been free-running (e.g., since the beginning of the lot) on a board
visible to the bidders (electronic circuitry can sense the hammer
blow, e.g., by force or sound, and issue a "stop" signal to clock
circuitry). At the hammer blow, the clock freezes and the last
digit (e.g., expressing the elapsed time in thousandths of a
second) is examined. If the digit is even, the auction is truly
over. If the digit is odd, the auction is only at a nominal end,
and a second phase follows.
[0009] In this latter case the auction enters a second
phase--either immediately, or after an intervening period (e.g., a
minute, an hour, a day, etc.). The period of any delay may not be
pre-determined, but may be determined as needed--in some cases by
reference to a process that includes a pseudo-random factor.
[0010] The second phase of the auction may be of a different style
than the original phase. An auction that is of the ascending bid
variety in its first phase may be followed by a first-price
sealed-bid in a second phase (and so forth for the other
combinations/permutations).
[0011] The possibility of a second auction phase may be desirable
from several standpoints. For example, an unsuccessful bidder may
experience "loser's remorse" and wish they had bid higher prior to
the end of the auction. Such remorse may be exclusively emotional,
or may be rational.
[0012] Rational remorse may occur, e.g., where an unsuccessful
bidder's view of fair value in an auction changes after the
auction's end. For example, such a bidder may learn additional
facts that can be applied prior to the end of the second phase. Or
such a bidder can simply learn the identity of the nominal winner
of the auction, and this additional information may cause such a
bidder to reassess their terminal bid.
[0013] For example, consider an auction for a patent. Most bidders
may have cross-licensing agreements with each other, so they are
generally outcome neutral as to which bidder wins the patent.
However, if the winning bidder is the one exception--the party who
does not have a cross-licensing agreement with the others--then
having such a party win the patent may give rise to significant
infringement liability to the losing bidders. In this case the
losers may quickly regret not bidding higher. In a second phase of
the auction, one or more losers may bid higher to try and beat the
former winner. In some cases, losers may collaborate (e.g., by
jointly funding a high bid) to try and change the auction
outcome.
[0014] Similarly, in some auction arrangements, the bidders do not
know if they are losers until the nominal end of the auction, and
this again may prompt a reassessment of valuation.
[0015] For example, consider the case in which 1,000,000 shares of
a company conducting an initial public offering are offered to
prospective purchasers in a second-price, sealed-bid auction. At
the nominal end of the auction, the auctioneer may have bids in
hand that merit selling the 1,000,000 shares for a price of $20
(i.e., bidders have made bids at or above $20/share for at least
1,000,000 shares). Upon announcing this news, unsuccessful bidders
(e.g., those who bid $19.75/share, and realize they will get no
shares), may want to bid $20.25 if a second phase of bidding is
available.
[0016] Of course, the detailed technology does not provide comfort
for bidder's remorse in all cases. Often the nominal end of the
auction is determined to be the final end--no second phase occurs.
However, in the occasional auction in which a second phase is
triggered, such second phase allows disappointed bidders to bid
higher--a more optimal outcome for them. And the seller may realize
a higher price for the subject of the auction--a more optimal
outcome for the seller.
[0017] One party may be disappointed--the party whose bid would
have won if the nominal end of the auction were the true final end
of the auction. That party's success is jeopardized, or it may
ultimately come at a higher price. Provision may be made to
mitigate that party's disappointment.
[0018] For example, the nominal prevailing bidder may be offered a
benefit of some sort if the auction enters a second phase. For
example, if that bidder is also the prevailing bidder at the end of
the second phase of the auction, she may be entitled to a discount
over the commission otherwise owed. (E.g., a buyer's commission of
15% may be reduced to 12% in such case.)
[0019] Such benefit may be conditioned on one or more factors. For
example, the prevailing bidder at the nominal end of the auction
may be entitled to the commission discount only if that party bids
further in the second phase of the auction--raising the price
ultimately paid.
[0020] The disappointed bidder from the first phase of the auction
may also receive a benefit if another party ultimately wins the
auction in the second phase. For example, the marginal increase in
price between the winning bid in the first phase and the winning
bid in the second phase may be shared with the disappointed initial
winner, e.g., with that party receiving 10%-50% of the
increase.
[0021] In some cases, auctions conducted subject to a possible
second phase may employ a different fee or commission schedule than
auctions without this feature. For example, a usual auction may
charge a 10% commission to the seller and a 15% commission to the
buyer. In contrast, auctions conducted with the possibility of a
second phase may charge, e.g., a 12% commission to the seller and a
12% commission to the buyer. This reflects the possibility that a
higher winning bid will be received by the seller and paid by a
buyer. A given auction may feature a variety of lots--some
auctioned in arrangements subject to a second phase, and some
without this possibility.
[0022] If an auction enters a second phase, the bidding may (but
need not) be limited to parties who entered bids in the first phase
of the auction. If the last bids in the first phase were $80, $90
and $100, bidding in the second phase may commence at the next
increment above $100, or by calling for a previously-made bid
(e.g., $80 or $90 or $100), or at some other initial price. The
bidder who prevailed in the first phase of the auction may be given
the privilege of bidding first in the second phase, or declining to
enter the first bid. She may likewise be given the privilege of
entering the second bid--if another party bids first. In some
auctions, the rules may provide that the prevailing bid entered in
the first phase of the auction is not binding if the auction enters
a second phase, or may provide that such bid continues to have
effect in the second phase.
[0023] If the second phase of the auction is of a single (e.g.,
sealed) bid variety, the time during which bidding is open can be
controlled in various ways. It can have a fixed period (e.g., ten
minutes; one hour; one day, etc.), or its duration can be a
function of a pseudo-random factor.
[0024] In some circumstances, a second phase of the auction may be
followed by a third phase--again triggered by functions such as are
detailed herein.
[0025] The decision protocol detailed earlier results in a second
phase of the auction--on average--in half of the cases. Other
probabilities can, of course, be utilized. E.g., a second phase may
be triggered only if the terminal digit of the fast-racing clock is
a "0." Such arrangement yields a second phase in about 10% of the
auctions.
[0026] Decision functions other than simply stopping a clock can be
used. For example, a physical process may be sampled at high
precision to give a variable independent of circumstances of the
auction. For example, the outside temperature may be sampled, and
the digit in the "thousandths" decimal place can be used as a
determining factor (like the terminal clock digit in the case
above). Or the real-time Dow Jones average can be sampled to the
nearest penny, and if the sum of the digits is even, then the
auction will enter a second phase.
[0027] More classically random, or pseudo random factors can also
be employed. One is a computer-implemented pseudo-random number
generator. Another is selection of one of several air-blown ping
pong balls (as are used in some state lottery systems).
[0028] The criteria used in deciding whether the auction continues
in a second phase can be made dependent on combinations of
factors--some not knowable to any bidder prior to the nominal end
of the auction (e.g., the arrangements detailed above) in
conjunction with other factors (which may be knowable or known).
For example, a second phase may be a possibility (e.g., decided by
functions like those noted above) only in auctions where the
nominal winning bid is below the bottom of the pre-auction estimate
range for the winning bid. If the nominal bidding bid is above the
bottom of the pre-auction estimate range, then no second phase is
considered. Or, a second phase may be considered only if the
nominal winning bid is above the top of the pre-auction estimate
range for the winning bid (or only if it is within the pre-auction
estimate range for the winning bid). Or, a second phase may be
undertaken based on a knowable/known factor, alone (i.e., without a
random aspect).
[0029] Still further, the threshold decision as to whether to
consider the possibility of a second phase may depend on bidding
activity, e.g., the number or timing of bids received prior to the
nominal end of the auction, or the number of bidders. E.g., if the
last five bids were a contest between just two bidders, then a
second phase may be considered. Or a second phase may be considered
if two (or three or five) or more bids were received in the last
minute of the auction. Or a second phase may be considered if more
than two (or three, or five, or ten, etc.) bidders participated in
the bidding. (Or if less than that number participated.) Such tests
may alternatively preclude a second phase of the auction, rather
than being a necessary (but not sufficient) condition thereto.
[0030] In yet other arrangements, a digit sampled from a process
independent of the auction (e.g., temperature, time, Dow Jones
average, etc.) may be compared with the last digit of the paddle
number for the nominal winning bidder; if they match (or if they
have the same even/odd state) then a second phase of the auction is
triggered.
[0031] Having described and illustrated the principles of the
technology with reference to specific implementations, it will be
recognized that the technology can be implemented in many other,
different, forms.
[0032] For example, a possible second phase of the auction needn't
be triggered by a factor independent of any bidder action. Indeed,
arrangements can be employed in which a disappointed bidder can
pro-actively trigger a second phase of the auction, e.g., by paying
a fee (e.g., 10% of the winning bid at the nominal end of the
auction). This fee may be split in various ways, such as with a
part of it (either a fixed number, or a percentage) being remitted
to the bidder who nominally prevailed in the first phase of the
auction. The disappointed bidder may have a predetermined period
(e.g., 30 seconds, five minutes, etc.) within which to trigger such
a second phase. Or such period may be a function of a random
process.
[0033] Such a bidder-triggered second phase may--like the
arrangements described above--be further conditioned on an
independent function. For example, the disappointed bidder may
first be required to remit a fee as detailed above, and then be
permitted to roll dice (or some other function may be invoked) to
determine whether a second phase of the auction will actually
occur.
[0034] In another variation, rather than giving a possible second
chance to a remorseful losing bidder, a possible second chance may
be available to a remorseful seller. For example, a seller may set
a reserve (minimum) price that, in hindsight, is thought to be too
low. At the nominal end of the auction, arrangements like that
detailed above may be employed to give the seller the possible
opportunity to reset the reserve price higher.
[0035] In automated implementations of such technology, the
methods, processes, and systems detailed above may be implemented
in hardware, software or a combination of hardware and software, as
is known from various of the patent publications incorporated by
reference.
[0036] To provide a comprehensive disclosure without unduly
lengthening this specification, applicant incorporates by reference
each of the documents referenced herein. Teachings from such
documents can be employed in conjunction with the
presently-described technology, and aspects of the
presently-described technology can be incorporated into the methods
and systems described in those documents. Among the documents
incorporated by reference are the following: [0037] Klemperer,
Auction Theory: A Guide to the Literature. Journal of Economic
Surveys, Vol. 13(3), pages 227--286, July 1999; [0038] Narahara et
al, Combinatorial Auctions for Electronic Business, Sadhana,
April/June, 2005, pp. 179-211; [0039] Sin, An Auction-Based Method
for Shared Wireless Medium Access Control, Masters Thesis, MIT,
June, 2003.
[0040] In view of the wide variety of embodiments to which the
principles and features discussed above can be applied, it should
be apparent that the detailed arrangements are illustrative only
and should not be taken as limiting the scope of the
technology.
* * * * *