Meeting Minutes - 21 January 2009

The 21st of January Peter Berends presented "The Impact of Clock Speeds on Bidders’ Arousal in Dutch Auctions". A paper by M. Adam, J. Krämer, C. Weinhardt (2008). 

In this study an experiment was conducted to show the impact of clock speed on "competitive arousal" and seller revenue. This paper was of interest to us, since in order to create intelligent agents that support human actors in the Dutch Flower Network we need to investigate the influence of speed in Dutch auctions.

When considering Adam's et al. study, the results in regard to seller revenue in this experiment are somewhat contradictory to prior experiments. It was found that seller revenue in a slower auction was not significantly different from fast auctions. Furthermore, differences in the variance of seller revenue between the slow and fast auctions were observed. Faster auctions have greater variance. This led to authors to believe that competitive arousal is not a function of elapsed time alone. This was previously asserted by Katok and Kwasnica (2008). The results clearly prove that, higher levels of skin conductivity are found in fast auctions compared to low. This means that arousal is higher for fast auctions.

In the discussion between the participants at LARGE we discussed whether the variance between the slow and the fast auction could be explained by the fact that subjects might become bored when participating in the auction experiment. They might become bored, because they play against only one other participant and in the slow auction the maximum length is theoretically 16:40min.

Meeting Minutes - 14 January 2009

Today I presented an overview of the priorly discussed articles on Dutch auctions. The following articles were discussed:

• Van den Berg and Van der Klauw, 2008. A Structural Empirical Analysis of Dutch Flower Auctions
• Katok and Kwasnica, 2008. Time is money: The effect of clock speed on seller’s revenue in Dutch auctions
• Carare and Rothkopf, 2005. Slow Dutch Auctions

There was a discussion on what we can learn from the theoretic models as modeled in these articles when building a theoretic model for super fast auctions as in the DFA.

• It was noted that the DFA has sequential auctions, which means that the cost of returning to the auction exists but not at the level of an individual auction.
• It was noted that 'Competitive Arousal' as discussed in Katok and Kwasnica exists in a different form in super fast auctions, since it is unlikely that within an individual auction levels of arousal differ.
• It was agreed that 'competitive arousal' in fast auctions could very well be a function of time, possibly not linear per se but this could be a good first start for building a model. Futhermore, the issue of arousal for experience was discussed because bidders who have been trading for years might not be influence very much by emotions.

Peter

Meeting Minutes - 7 January 2009

Today I discussed the paper entitled "Slow Dutch Auctions" by Octavian Carare and Michael Rothkopf (Management Science, 51(3), 365-373, 2005). These are a few of the issues that were raised during the discussion:

• Is it realistic to think that the results of Lucking-Reiley (1999) may be due to transaction costs? Aren't there other more plausible explanations (e.g., some form of bounded rationality)? Aren't transaction costs too low to have a significant effect?
• Why do the authors assume randomly arriving bidders in their game-theoretic analysis? What are the implications of this assumption?
• How would the analysis in the paper change if we take into account that there can be many auctions (simultaneously or sequentially) of similar objects? This may create competition among auctioneers. What effect can be expected from this?
• Should we regard the results in the paper as surprising or not? Do they make sense intuitively? Can the analysis be generalized?
• In what way can agent-based research contribute to our understanding of auction mechanisms? What could be the added value of agent-based research over game-theoretic and experimental research?

Ludo