Hybrid Clock Proxy Auction for Efficient Item Allocation
Find Innovative SolutionsGenerate Solutions
Solution Overview
Problem
Existing auction methods struggle to efficiently allocate related items, such as complementary and substitute goods, in a way that maximizes value for both buyers and sellers, especially in complex scenarios involving multiple types of items.
Innovation Solution
A hybrid auction system that combines a clock auction with a proxy auction, allowing for multiple phases where bidders submit package bids with linear pricing and optimizing outcomes to achieve bidder-optimal core results, incorporating dynamic bidding and package bidding mechanisms.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If a traditional single-phase auction is used, then the auction process is simple to implement, but it cannot efficiently allocate related items (complements and substitutes) to maximize value
Solution Approach 1:
The patent divides the auction into two distinct phases: a clock auction phase for initial price discovery and demand revelation, and a proxy auction phase for final allocation optimization. This segmentation allows each phase to specialize in different functions, improving overall allocation efficiency while managing complexity through structured progression.
Solution Approach 2:
The patent employs dynamic pricing mechanisms where prices adjust iteratively during the clock auction phase based on bidder responses. The system dynamically transitions from the clock phase to the proxy phase when market clearing conditions are met, allowing the auction process to adapt to revealed bidder preferences and maximize allocation efficiency.
2Ease of operation
If a clock auction is used, then transparency and simplicity are improved, but competitive revenues and efficient allocation of related items are reduced
Solution Approach 1:
The patent merges the transparent clock auction mechanism with the revenue-optimizing proxy auction mechanism into a hybrid system. The clock phase provides transparency and simplicity for bidders to understand price movements, while the proxy phase leverages revealed valuation information to achieve bidder-optimal core outcomes that maximize competitive revenues and efficient allocation of related items.
3Productivity
If a proxy auction is used, then competitive revenues and efficient allocation are improved, but transparency and simplicity are reduced
Solution Approach 1:
The patent performs preliminary price discovery and demand revelation through the clock auction phase before transitioning to the proxy auction phase. This preliminary action provides transparency to bidders about price levels and demand patterns, which then informs the proxy auction's allocation decisions, maintaining bidder understanding while achieving revenue efficiency.
4Productivity
If package bidding is allowed, then efficient allocation of related items is improved, but the complexity of bid processing and outcome determination increases
Solution Approach 1:
The patent implements feedback mechanisms where bidder responses in the clock phase inform price adjustments and allocation decisions. The system uses revealed preference information from iterative bidding to guide the transition to the proxy phase, where final allocation optimizes for efficient distribution of related items while managing processing complexity through structured information aggregation.
Data Source
AI summary
The present invention primarily concerns hybrid auctions that may, for example, combine a clock auction with a proxy auction. Hybrid auctions include multi-item auctions that comprise at least two phases of package auctions: an earlier phase in which bidders participate in a clock auction (or other dynamic auction); and a later phase in which bidders participate in a proxy auction (or some other package auction). By combining the earlier phase and the later phase as in some of the embodiments described herein, it is possible to combine the advantages of the dynamic auction and the advantages of the sealed-bid package auction. In particular, if the earlier phase is a clock auction and the later phase is a proxy auction, then the resulting hybrid auction will combine the transparency and simplicity of the clock auction with the efficient outcome and competitive revenues of the proxy auction.