8ld Cnllne

nLroducLlon
Formalized trading procedures in which the trading partners'
interaction is governed by specific trading rules.
Auctioneer is functioning as an intermediary.
The auction patterns vary with the trade objects and trade
rules.
Since the diffusion of the Web has gained momentum and the
number of Web users is rising steeply lectronic markets
particularly EIectronic Auctions.
Auction Protocols for ensuring different security properties
ucLlons
1ypes of aucLlons
Lngllsh ucLlons
uuLch ucLlons
Sealed flrsLprlce aucLlon
Sealed secondprlce aucLlon
Lngllsh ucLlon
1hese are Lhe mosL common aucLlons ln
pracLlce
8lds ascend wlnner geLs Lhe lLem aL Lhe prlce
she bld
CpLlmal sLraLegy bld a llLLle more Lhan Lhe
nexL hlghesL person
!usL keep golng unLll no one else ls blddlng
lor Lhe seller Lo be happy Lhere musL be
enough compeLlLlon Lo drlve up blds
uuLch ucLlon
SLarL aL max aucLloneer gradually decreases
bld
LqulvalenL ln Lerms of revenue Lo a flrsLprlce
aucLlon
Pas Lhe advanLage of closlng qulckly
Sealed flrsLprlce aucLlon
ll bldders slmulLaneously submlL sealed blds
so LhaL no bldder knows Lhe bld of any oLher
parLlclpanL
1he hlghesL bldder pays Lhe prlce Lhey
submlLLed
Commonly used ln Lenderlng parLlcularly for
governmenL conLracLs and aucLlons for mlnlng
leases
Sealed secondprlce aucLlon
Submlsslon of blds are same as Sealed flrsL
prlce aucLlon
8uL Lhe wlnnlng bldder pays Lhe second
hlghesL bld raLher Lhan hls or her own
I|xed vs Dynam|c r|c|ng
llxed rlclng
Seller seLs sales prlce for an lLem and Lhe purchase ls
made when a buyer comes along Lo pay LhaL prlce
1ook hold when lndusLrlal revoluLlon sLarLed
When uemand was hlgher Lhan roducLlon
CompeLlLlon globallsaLlon and beLLer producLlon
Lechnlques led Lo a hlgher producLlon Lhan demand
now buslness needs Lo compeLe wlLh sales
Lxample of llxed prlclng ls 8uy L now" ln e8ay
I|xed vs Dynam|c r|c|ng Cntd
uynamlc rlclng
1he openlng bld amounL ls esLabllshed by seller
and poLenLlal buyers offer Lo pay LhaL prlce or go
beyond lL Lhrough lncremenLal blds
rlces LhaL are deLermlned based on supply and
demand relaLlonshlps aL any glven Llme
Lnsures sales Lo buslnesses
Lxample of uynamlc prlclng ls 8lds" ln e8ay
Auctions as co-ordination mechanism
Efficient co-ordination mechanism for establishing
an equilibrium
Automated auction among software agents to
control air conditioning at Xerox {Markoff 1996_
Allocation of telecommunication bandwidth
Little or no human intervention during the trading
process.
ucLlons as a soclal mechanlsm Lo
deLermlne a prlce
Cb[ecLs whlch are
noL Lraded on LradlLlonal markeLs
unlque or rare lLems
Whlch are offered randomly or aL long lnLervals
LLracLs oLenLlal 8uyers
Cffers numerous of Lhese speclal lLems aL one Llme and Lhere by
aLLracLs a good amounL of aLLenLlon
lece of flne arL or rare lLems as well as aucLlons of communlcaLlon
frequencles (cfLewyn 1994 CramLon 1993)
ucLlons as efflclenL allocaLlon
mechanlsms
roducLs wlLh a llmlLed shelf llfe or lasL
mlnuLe producLs llke seaLs ln a scheduled
fllghL
CversLocked producLs LhaL shall be separaLed
from Lhe new producL serles
ulsconLlnued or recondlLloned lLems
ccepL Lhe producL resLrlcLlons ln reLurn for a slgnlflcanL dlscounL
ucLloneer malnLalns Lhe depLh and wldLh of Lhe markeL
Lyplcal example of Lhls Lype of aucLlon ls Cnsale (cf LconomlsL
1997)
lramework for ucLlons
Suppller
CusLomer
ucLloneer
ucLlon
1rade
Cb[ecLs
8ule 8ase
1ransacLlon hase
JJJ$@
ects
Compet|ng Auct|ons
and @rade Iorms
1he aucLloneer provldes Lhe lnsLlLuLlonal seLLlng of Lhe aucLlon
ulfferenL LransacLlon phases of Lhe Lradlng process
nformaLlon exchange
rlce deLermlnaLlon
1rade execuLlon and seLLlemenL
fflllaLed wlLh Lhe suppllers of Lhe Lradlng goods
some emphaslze Lhelr role as lnLermedlarles who provlde Lradlng
plaLforms for a varleLy of producLs and vendors
ccess 8ules for 8uyers and
Suppllers
nsLlLuLlonal deslgn maln parameLers
uepends on Lhe repuLaLlon
1radlng goods are avallable
romlsed quallLy or wheLher Lrades are execuLed wlLhouL frlcLlons
ConLrol mechanlsms requlred advance paymenLs or oLher credlble
commlLmenLs of Lhe parLlclpanLs
1rade Cb[ecLs
1he varleLy of poLenLlal ob[ecLs Lraded on aucLlons can be dlsLlngulshed lnLo Lhree
broad caLegorles
lor commodlLles aucLlons lmprove Lhe markeL Lransparency and
faclllLaLe adhoc prlce deLermlnaLlon
lor perlshable producLs ln a broad sense such as alrllne seaLs or
oversLocked producLs
lor producLs wlLh a llmlLed avallablllLy such as pleces of flne arL
collecLors lLems or communlcaLlon frequencles
1rade 8ules
numerous rules have been developed LhaL govern Lhe Lradlng process ln
parLlcular Lhe exposure of blds and offers and Lhe Lrade execuLlon
CompeLlng ucLlons
So many acLlons avallable
ulfferenL aucLlon sLraLegles for dlfferenL Cb[ecLs
1hls mlghL llmlL Lhe llquldlLy of Lhe rare and llmlLed amounL of producLs
1he mpacL of Lhe Web
SLandardlzed mechanlsms for hypermedla
represenLaLlon of Lrade ob[ecLs
1he developmenL and dlffuslon of sLandardlzed search
mechanlsms and evenLdrlven noLlflcaLlon of bldders as
well as
Mechanlsms for secure paymenLs encourage cusLomers
Lo opL for Web aucLlons
wlLh elecLronlc Lrade execuLlon
arameter mpact o the Jeb
ucLloneer Lower enLry barrlers opporLunlLy for dlrecL sales
ccess rules CusLomlzable LheoreLlcally mllllons of poLenLlal
cusLomers can be reached
1radlng ob[ecLs locused producL segmenLs can be aucLloned off
Lhe Lechnology exLends Lhe complexlLy of Lhe producL
descrlpLlon
1radlng rules 1he Lradlng rules reflecL Lhe lack of a guaranLeed servlce
SeLLlemenL lor dlglLal producLs Lhe enLlre Lradlng cycle can be
handled on Lhe Web for physlcal producLs Lhe Lradlng
process and Lhe physlcal loglsLlcs of Lhe Lrade ob[ecLs can
be separaLed leadlng Lo a reducLlon of cosLs
1he mpacL of Lhe Web
ucLlon roLocol
Why?
SeL of rules
L2L communlcaLlon
8uyers should reach Lhe LruLhfull lnformaLlon
Sellers should geL accounLable 8lds
ucLloneers should geL Lo be LrusLed
CrypLographlc SupporL
1o verlfy a parLlcular aucLlon noLlce belng posLed and accesslble over a cerLaln perlod of Llme
uurlng Lhe process of blddlng Lhe blds should noL geL Lampered and should noL dlsclosed
Lo Lhe bldders
n open ouLcry aucLlons Lhe seller or aucLloneer have a chance Lo lncrease Lhe bldraLes
n order Lo avold LhaL Lhere should be verlflable connecLlon beLween Lhe bldder Lo anoLher
known bldder
resence of knowledgeable bldder should be anonymous
8uL lnLerneL aucLlons canL geL Lhrough Lhls mechanlsm
Cnllne ucLlon roLocol
ulfferenL aucLlon proLocols have been deslgned Lo achleve dlfferenL goals and requlremenLs
Some aucLlon proLocols based on Lhe common rules
Some aucLlon proLocols based addresslng Lhe Llmlng lssue of Lhe lnLerneL aucLlons
Lvery aucLlon proLocol have developed based on Lhe wellknown algorlLhms or procedures llke
8S SSL uLS
Sealed first-price auction Working
tep 1 keg|strat|on
b1->blind(PKps) SGa(b1)
b2->blind(TLP(B)) SGa(b2)
SGb(b1,b2,auct)
C#T(PKb)
tep 2 8|d ubm|ss|on
8ob encrypLs hls bld wlLh secreL symmeLrlc key k
MbldaucL_ld
Slgns M wlLh SkS valld 8ld (v)
nonymously sends v 18 ucLloneer
8ob geLs a 8LCL1
Pe verlfles Lhls uslng C#T(PKs)
$tep- 3 PubIication Committed Bids
After process closes Auctioneer publish the committed bids
Sealed first-price auction
$tep -4 Bids ReveIation
Bob reveals himself by sending pair(K,#CPT) to Auctioneer
He verifies Bob in Database
Uses K to decrypt the encrypted bid
f Bob will not submit K with in time t, bid will trace back to Bob by solving
Time-Lock Puzzle.
$tep- 5 FinaI ResuIt
Auctioneer decrypted bids, keys used will be published
$tep-6 The winner Proof
Bob sends his bid by using his signature, if he is the winner the
bid will be revealed by solving Time-Lock Puzzle T#.
Sealed8ld
Coal mplemenL sealedbld proLocol ln secured manner
rocess 8lddlng process wlll be done secreLly for an adverLlsemenL
Wlnner ls declded based on Lhe publlcally known rule
Lxamples uS CovL used Lhls Lo sell a CovL land
ssues whlle developlng Lhe proLocol
11lme of dlsclosure ls lmporLanL
2nonrepudaLlon mechanlsms Lo ensure paymenLs collecLed fro Lhe bld wlnners
3s lL ls surrounded by secrecy lL may have dlfflculL for bldders Lo belleve Lhe valldlLy
of aucLlon
4 8ldders Lo be anonymous
1wo hases1wo roperLles
Bidding secretly
Opening and announcing winner
These process should ensure two properties
1.Validity :-
The auction eventually closes
The winner will be announced based on publically known rule
The money collected from the winner should be equal to his bidding amount
Looser bidders wont get any money.
Only winning bidder can collect the item.
2.Secrecy :-
dentity of bidder and biddings wont revealed
To allow anonymous bids allowed
The messages between the bidders and sellers wont get interrupted or manipulated
Sealed8ld roLocols
Mllllonalres roLocol
ucLloneer recelves 8lds from n bldders
1he bld range ln lnLegers wlll be seL
Lach malnLaln Lhelr own encrypL and decrypL funcLlons
Cnce wlnner has been announced Lhe bldder
wlll reach Lhe bldLaker and glves hls secreL prlvaLe encrypLlon funcLlon
Sealed8ld proLocols wlLh secreL sharlng shared polynomlals
ucLlons LhaL seeks Lhe address of belng economlcal fasL access
malnLalnlng prlvacy
voldlng Lhe posslblllLy of flnal blddlng ls arLlflclally low
wlLh some modlflcaLlons also anonymlLy can be achleved
Concluslon
The Web has provided low-cost access to a global market space and at the
same time highly focused customer groups.
The wide availability of standardized software clients for the access to
auctions, in most cases just Web browsers, has extended the group of potential
participants.
Cost-efficient communication infrastructures and low-cost market-engines
have enabled auctioneers to set up auctions quickly and with limited
investments.