Bilateral Negotiation With Fees

Proceedings of the 1st IAC Workshop on Internet Based Negotiation Technologies, 1999

Posted: 6 Apr 2007

See all articles by Axel Anderson

Axel Anderson

Georgetown University - Department of Economics

Ionel Birgean

affiliation not provided to SSRN

Jeffrey K. MacKie-Mason

UC Berkeley; University of Michigan

Abstract

Bilateral negotiation over a single good or service is a fundamental problem for automated systems, and is surprisingly resistant to general solutions. In this paper we offer advice and new results for the design of electronic negotiation and market systems. We review the theoretical and experimental literature as guide to pragmatic design. We then investigate how some well-studied simple mechanisms could be extended with transaction and entry fees to improve their efficiency or their budget balance. The goal is to support pragmatic design for online automated transactions. We find that an iterated Generalized Vickrey Auction with fees can maintain budget balance and improve trading efficiency over a single-shot GVA. For k-double auctions we find that when processing costs are a function of the number of bids then efficiency favors entry fees, while transactions fees are favored if processing costs are a function of the number of transactions. We present simulations to support our theoretical conclusions.

Suggested Citation

Anderson, Axel and Birgean, Ionel and MacKie-Mason, Jeffrey K., Bilateral Negotiation With Fees. Proceedings of the 1st IAC Workshop on Internet Based Negotiation Technologies, 1999, Available at SSRN: https://ssrn.com/abstract=978706

Axel Anderson (Contact Author)

Georgetown University - Department of Economics ( email )

Washington, DC 20057
United States

Ionel Birgean

affiliation not provided to SSRN

No Address Available

Jeffrey K. MacKie-Mason

UC Berkeley ( email )

102 South Hall
Berkeley, CA 94720-4600
United States

HOME PAGE: http://jeff-mason.com

University of Michigan ( email )

Ann Arbor, MI 48109-1092
United States

HOME PAGE: http://http:/jeff-mason.com/

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