Dynamic Auction Pricing Algorithm for Fair Market Allocation
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Solution Overview
Problem
Existing auction systems fail to account for individual buyer interests, leading to unequal prices for the same product or service, and lack a mechanism to dynamically adjust prices based on demand and interest, resulting in inefficient market dynamics.
Innovation Solution
A system and method that allow buyers to submit purchase proposals within defined price ranges, processed by an algorithm to determine a dynamic lot price, applying a bonus factor to align higher proposals with the lowest bid, ensuring all buyers benefit from the lowest price, and incorporating complementary services like financing and insurance.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If traditional auction systems are used, then the auction process is simple to operate, but individual buyer interests are not accounted for, leading to unequal prices for the same product or service
Solution Approach 1:
The patent implements dynamic pricing by allowing the system to adjust prices in real-time based on individual buyer proposals and market demand. The managing system processes multiple buyer proposals and dynamically determines the lot price, ensuring that each buyer pays a price that reflects their specific interest and the current market conditions, thereby achieving price fairness while maintaining operational simplicity.
Solution Approach 2:
The system changes the price parameter dynamically based on buyer proposals and demand indicators. Instead of fixed pricing, the managing system adjusts the lot price according to the collected proposals and market conditions, allowing the same product to have different prices for different buyers based on their individual interests and the overall demand level.
2Device complexity
If fixed pricing is used, then the pricing mechanism is simple, but the system cannot dynamically adjust prices based on demand and interest, resulting in inefficient market dynamics
Solution Approach 1:
The patent implements a feedback mechanism where the managing system collects buyer proposals, analyzes demand indicators, and uses this information to dynamically adjust the lot price. The system continuously monitors market conditions and buyer interest, feeding this information back into the pricing decision process to achieve efficient market dynamics while managing the complexity of the pricing mechanism through automated processing.
3Measurement precision
If multiple buyers submit proposals, then individual interests are considered, but without a bonus factor mechanism, higher proposals benefit more buyers unfairly
Solution Approach 1:
The patent applies the equipotentiality principle by using the bonus factor mechanism to equalize the benefits received by different buyers. The system calculates the bonus factor based on the relationship between individual proposals and the lot price, ensuring that all buyers within the lot receive proportional benefits that reflect their proposals while maintaining overall price equity. This prevents unfair advantages and creates a balanced distribution of benefits among all buyers.
4Device complexity
If transaction guarantees are not provided, then the system is simpler to operate, but buyers and sellers lack confidence in completing transactions
Solution Approach 1:
The patent introduces a managing system that acts as an intermediary between buyers and sellers to provide transaction guarantees. This intermediary manages the auction process, validates proposals, determines the lot price, and ensures that transactions are completed according to the established rules. The managing system builds trust between buyers and sellers by providing a neutral party that oversees the entire process and ensures fair treatment for all participants.
Data Source
AI summary
The present invention relates to a system and a method for performing sale actions of a product or service through a communication network (300) which comprises: sending to one seller (100) the specifications of the product or service with a reference price, so that the seller (100) can present one or more offers (10) to be put up for sale; receiving, from the seller (100), the offer (10) for of product or service to be put up for sale; storing the offer (10) in a database (310) of the communication network (300); receiving, from a plurality of buyers (200), a plurality of purchase proposals (20) for the product or service, the plurality of purchase proposals (20) being determined for the offer (10) of the seller (100); storing the plurality of purchase proposals (20) in the database (310) of the communication network (300); processing the plurality of purchase proposals (20) and determining a product or service matrix, the matrix being constituted by the plurality of purchase proposals (20) received for the offer (10); monitoring when the seller (100) takes a new lot (30) at his opportune moment or at the time limit, in the course of the auction, at the price of his interest to sell the product or service to the plurality of buyers (200) who has given the plurality of units corresponding to the purchase proposals (20) of the respective lot (30).