Stochastic Modelling and Optimisation of Internet Auction Processes

AbstractInternet auctions are an attractive mechanism for the exchange of goods at a non-fixed price point. The operation of these auctions can be run under a variety of parameters. In this paper, we provide a theoretical analysis of fixed time forward auctions in cases where a single bid or multiple bids are accepted in a single auction. A comparison of the economic benefits and the corresponding buyer and seller surpluses between the auctions where a single bid is accepted and the auctions where multiple bids are accepted is made. These models are verified through systematic simulation experiments, based on a series of operational assumptions, which characterise the arrival rate of bids, as well as the distribution from which the private values of buyers are sampled. Decision rules for optimising surplus under different auction fee structures are also given

Applications of Negotiation Theory to Water Issues

The purpose of the paper is to review the applications of non-cooperative bargaining theory to water related issues – which fall in the category of formal models of negotiation. The ultimate aim is that to, on the one hand, identify the conditions under which agreements are likely to emerge, and their characteristics; and, on the other hand, to support policy makers in devising the “rules of the game” that could help obtain a desired result. Despite the fact that allocation of natural resources, especially of trans-boundary nature, has all the characteristics of a negotiation problem, there are not many applications of formal negotiation theory to the issue. Therefore, this paper first discusses the non-cooperative bargaining models applied to water allocation problems found in the literature. Particular attention will be given to those directly modelling the process of negotiation, although some attempts at finding strategies to maintain the efficient allocation solution will also be illustrated. In addition, this paper will focus on Negotiation Support Systems (NSS), developed to support the process of negotiation. This field of research is still relatively new, however, and NSS have not yet found much use in real life negotiation. The paper will conclude by highlighting the key remaining gaps in the literature.Negotiation theory, Water, Agreeements, Stochasticity, Stakeholders

Performance controls for distributed telecommunication services

As the Internet and Telecommunications domains merge, open telecommunication service architectures such as TINA, PARLAY and PINT are becoming prevalent. Distributed Computing is a common engineering component in these technologies and promises to bring improvements to the scalability, reliability and flexibility of telecommunications service delivery systems. This distributed approach to service delivery introduces new performance concerns. As service logic is decomposed into software components and distnbuted across network resources, significant additional resource loading is incurred due to inter-node communications. This fact makes the choice of distribution of components in the network and the distribution of load between these components critical design and operational issues which must be resolved to guarantee a high level of service for the customer and a profitable network for the service operator. Previous research in the computer science domain has addressed optimal placement of components from the perspectives of minimising run time, minimising communications costs or balancing of load between network resources. This thesis proposes a more extensive optimisation model, which we argue, is more useful for addressing concerns pertinent to the telecommunications domain. The model focuses on providing optimal throughput and profitability of network resources and on overload protection whilst allowing flexibility in terms of the cost of installation of component copies and differentiation in the treatment of service types, in terms of fairness to the customer and profitability to the operator. Both static (design-time) component distribution and dynamic (run-time) load distribution algorithms are developed using Linear and Mixed Integer Programming techniques. An efficient, but sub-optimal, run-time solution, employing Market-based control, is also proposed. The performance of these algorithms is investigated using a simulation model of a distributed service platform, which is based on TINA service components interacting with the Intelligent Network through gateways. Simulation results are verified using Layered Queuing Network analytic modelling Results show significant performance gains over simpler methods of performance control and demonstrate how trade-offs in network profitability, fairness and network cost are possible

Operational Research: Methods and Applications

Throughout its history, Operational Research has evolved to include a variety of methods, models and algorithms that have been applied to a diverse and wide range of contexts. This encyclopedic article consists of two main sections: methods and applications. The first aims to summarise the up-to-date knowledge and provide an overview of the state-of-the-art methods and key developments in the various subdomains of the field. The second offers a wide-ranging list of areas where Operational Research has been applied. The article is meant to be read in a nonlinear fashion. It should be used as a point of reference or first-port-of-call for a diverse pool of readers: academics, researchers, students, and practitioners. The entries within the methods and applications sections are presented in alphabetical order. The authors dedicate this paper to the 2023 Turkey/Syria earthquake victims. We sincerely hope that advances in OR will play a role towards minimising the pain and suffering caused by this and future catastrophes

Multi-keyword multi-click advertisement option contracts for sponsored search

In sponsored search, advertisement (abbreviated ad) slots are usually sold by a search engine to an advertiser through an auction mechanism in which advertisers bid on keywords. In theory, auction mechanisms have many desirable economic properties. However, keyword auctions have a number of limitations including: the uncertainty in payment prices for advertisers; the volatility in the search engine's revenue; and the weak loyalty between advertiser and search engine. In this paper we propose a special ad option that alleviates these problems. In our proposal, an advertiser can purchase an option from a search engine in advance by paying an upfront fee, known as the option price. He then has the right, but no obligation, to purchase among the pre-specified set of keywords at the fixed cost-per-clicks (CPCs) for a specified number of clicks in a specified period of time. The proposed option is closely related to a special exotic option in finance that contains multiple underlying assets (multi-keyword) and is also multi-exercisable (multi-click). This novel structure has many benefits: advertisers can have reduced uncertainty in advertising; the search engine can improve the advertisers' loyalty as well as obtain a stable and increased expected revenue over time. Since the proposed ad option can be implemented in conjunction with the existing keyword auctions, the option price and corresponding fixed CPCs must be set such that there is no arbitrage between the two markets. Option pricing methods are discussed and our experimental results validate the development. Compared to keyword auctions, a search engine can have an increased expected revenue by selling an ad option.Comment: Chen, Bowei and Wang, Jun and Cox, Ingemar J. and Kankanhalli, Mohan S. (2015) Multi-keyword multi-click advertisement option contracts for sponsored search. ACM Transactions on Intelligent Systems and Technology, 7 (1). pp. 1-29. ISSN: 2157-690

Supply Side Optimisation in Online Display Advertising

On the Internet there are publishers (the supply side) who provide free contents (e.g., news) and services (e.g., email) to attract users. Publishers get paid by selling ad displaying opportunities (i.e., impressions) to advertisers. Advertisers then sell products to users who are converted by ads. Better supply side revenue allows more free content and services to be created, thus, benefiting the entire online advertising ecosystem. This thesis addresses several optimisation problems for the supply side. When a publisher creates an ad-supported website, he needs to decide the percentage of ads first. The thesis reports a large-scale empirical study of Internet ad density over past seven years, then presents a model that includes many factors, especially the competition among similar publishers, and gives an optimal dynamic ad density that generates the maximum revenue over time. This study also unveils the tragedy of the commons in online advertising where users' attention has been overgrazed which results in a global sub-optimum. After deciding the ad density, the publisher retrieves ads from various sources, including contracts, ad networks, and ad exchanges. This forms an exploration-exploitation problem when ad sources are typically unknown before trail. This problem is modelled using Partially Observable Markov Decision Process (POMDP), and the exploration efficiency is increased by utilising the correlation of ads. The proposed method reports 23.4% better than the best performing baseline in the real-world data based experiments. Since some ad networks allow (or expect) an input of keywords, the thesis also presents an adaptive keyword extraction system using BM25F algorithm and the multi-armed bandits model. This system has been tested by a domain service provider in crowdsourcing based experiments. If the publisher selects a Real-Time Bidding (RTB) ad source, he can use reserve price to manipulate auctions for better payoff. This thesis proposes a simplified game model that considers the competition between seller and buyer to be one-shot instead of repeated and gives heuristics that can be easily implemented. The model has been evaluated in a production environment and reported 12.3% average increase of revenue. The documentation of a prototype system for reserve price optimisation is also presented in the appendix of the thesis

Operational Research: Methods and Applications

Throughout its history, Operational Research has evolved to include a variety of methods, models and algorithms that have been applied to a diverse and wide range of contexts. This encyclopedic article consists of two main sections: methods and applications. The first aims to summarise the up-to-date knowledge and provide an overview of the state-of-the-art methods and key developments in the various subdomains of the field. The second offers a wide-ranging list of areas where Operational Research has been applied. The article is meant to be read in a nonlinear fashion. It should be used as a point of reference or first-port-of-call for a diverse pool of readers: academics, researchers, students, and practitioners. The entries within the methods and applications sections are presented in alphabetical order

An Integrated Framework for Modelling and Control of eP2P Interactions based on Model Predictive Control

The energy paradigm is undergoing substantial changes in recent years. In terms of production, it is observable how distributed generation, with an ever-increasing contribution from renewable sources, is displacing large concentrated generation plants. But the fundamental change is not so much about energy supply as about diluting the historical roles of producers and consumers to give way to the concept of prosumers. That is, instead of just being energy consumers, households and industries also become producers. In principle, the purpose of this production, which is inherently distributed, is self-consumption. However, when there is a surplus of production, prosumers can choose between storing the excess, if they have an energy storage system, or sell the unused fraction of energy. An obvious type of prosumers are those industries that have renewable generation facilities and which, as a consequence of their production process, generate by-products that can be used for cogeneration. In this case an obvious problem for the company is to select at all times the power sources that minimize the cost of production, which is known as Optimal Power Dispatch (OPD). If, in addition, the energy consumption time profile of the manufacturing process (per unit of raw material introduced) is known, it is also possible to make an optimal production schedule to minimize energy cost, which is called Optimal Power Scheduling (OPS). Chapter 3 presents an Economic Model Predictive Controller (EMPC) that simultaneously performs OPD and OPS using an olive mill as an example. The emergence of the role of energy prosumers makes it necessary to extend, improve or replace the traditional mechanisms of energy exchange. This thesis includes novel approaches for modelling the behaviour of prosumers. It also proposes new structures to facilitate energy trading, always from the perspective of the peerification of the energy paradigm. Thus, another line of research studies the establishment of peer-to-peer (P2P) markets for the exchange of energy between heterogeneous prosumers (homes, vehicles, intelligent buildings, etc.). The efficiency of markets based on both discrete double auctions (DDAs) and continuous double auctions (CDAs) is compared. An Energy Management System (EMS) is also introduced including market agent software that allows the necessary tasks for participation in the auctions to be carried out automatically (determination of private valuation, role selection and price adaptation). Chapter 4, Chapter 5 and Chapter 6 present some examples of such exchange markets stablished between different types of prosumers: i) energy market for electric vehicles that coincide parked in a large workplace, ii) power market for households within the same neighbourhood and iii) integrated energy and power markets for heterogeneous energy entities. The evolution of aforementioned mechanisms and the appearance of new market models must be accompanied by the development of control techniques that optimise and automate all the processes related to energy saving and trading, by a group of increasingly heterogeneous prosumers. This thesis deals with how different variants of predictive controllers can contribute to this last aspect. For industries with cogeneration capacity, the EMPC contributes to the optimal scheduling of production to maximise the return from energy reuse, either through self-consumption or through the trading of surpluses. The use of stochastic predictive control is proposed in order to maximise the expected return on the participation of prosumers, whatever their type, in continuous markets where the price of energy may undergo stochastic variations.El paradigma energético está experimentando cambios sustanciales en los últimos años. En cuanto a la producción, se observa cómo la generación distribuida, con un aporte cada vez mayor de fuentes renovables, está desplazando a las grandes plantas de generación concentrada. Pero el cambio fundamental no consiste tanto en el suministro de energía como en la dilución de la clasificación tradicional entre productores y consumidores para dar paso al concepto de prosumidores. Es decir, en lugar de ser simplemente consumidores de energía, los hogares y las industrias también se convierten en productores. En principio, el objetivo de esta producción, que es intrínsecamente distribuida, es el autoconsumo. Sin embargo, cuando hay un excedente de producción, los prosumidores pueden elegir entre almacenar el excedente, si tienen un sistema de almacenamiento de energía, o vender la fracción no utilizada de la energía. Un tipo obvio de prosumidores son aquellas industrias que cuentan con instalaciones de generación renovable y que, como consecuencia de su proceso de producción, generan subproductos que pueden ser utilizados para la cogeneración. En este caso, un problema obvio para la empresa es seleccionar en todo momento las fuentes de energía que minimizan el coste de producción, lo que se conoce como Optimal Power Dispatch (OPD). Si, además, se conoce el perfil temporal de consumo de energía asociado al proceso de fabricación (por unidad de materia prima introducida), también es posible realizar un programa de producción óptimo para minimizar el coste de la energía, lo cual se denomina Optimal Power Scheduling (OPS). El capítulo 3 presenta un Controlador Predictivo Económico basado en Modelo (EMPC) que realiza simultáneamente OPD y OPS utilizando como caso de estudio una almazara olivarera. La aparición de la figura de los prosumidores energéticos hace necesario ampliar, mejorar o sustituir los mecanismos tradicionales de intercambio energético. Esta tesis incluye enfoques novedosos para modelar el comportamiento de los prosumidores. También propone nuevas estructuras para facilitar el comercio de energía, siempre desde la perspectiva de la peerificación del paradigma energético. Así, otra línea de investigación estudia el establecimiento de mercados peer-to-peer (P2P) para el intercambio de energía entre prosumidores heterogéneos (viviendas, vehículos, edificios inteligentes, etc.). Se compara la eficiencia de los mercados basados tanto en subastas dobles discretas (Discrete Double Auction - DDA) como en subastas dobles continuas (Continuous Double Auctions - CDA). También se introduce un Sistema de Gestión Energética (Energy Management System - EMS) que incluye un software de agente de mercado que permite que las tareas necesarias para la participación en las subastas (determinación de la valoración privada, selección de roles y adaptación de precios) se lleven a cabo automáticamente. Los capítulos 4, 5 y 6 presentan algunos ejemplos de estos mercados de intercambio establecidos entre diferentes tipos de prosumidores: i) mercado de energía para vehículos eléctricos que coinciden aparcados en un gran lugar de trabajo, ii) mercado de energía para hogares dentro de un mismo barrio y iii) mercados integrados de energía y electricidad para entidades energéticas heterogéneas. La evolución de los mecanismos mencionados y la aparición de nuevos modelos de mercado deben ir acompañados del desarrollo de técnicas de control que optimicen y automaticen todos los procesos relacionados con el ahorro y la comercialización de la energía, por parte de un conjunto de prosumidores cada vez más heterogéneos. Esta tesis trata de cómo las diferentes variantes de los controladores predictivos pueden contribuir a este último aspecto. Para las industrias con capacidad de cogeneración, el EMPC contribuye a la programación óptima de la producción para maximizar el rendimiento de la reutilización de la energía, ya sea a través del autoconsumo o de la comercialización de excedentes. Por otro lado, se propone el uso del control predictivo estocástico para maximizar el rendimiento esperado de la participación de los prosumidores, cualquiera que sea su tipo, en mercados P2P donde el precio de la energía está sujeto a incertidumbres