Bidding Strategies in Internet Yankee Auctions: Theory and Evidence

In the past few years, we have witnessed a tremendous proliferation of transactions using the Internet as a virtual marketplace. U.S. News and World Report estimates the value of electronic commerce around $13 billion in 1998. In addition to transactions where prices are posted, sellers also use Internet auctions to sell goods such as clothing, collectibles, computers, and electronics. Current estimates place the value of auction transactions in the Internet at$30 million per week. A popular format for Internet auctions is the Yankee format. Here, a seller offers k identical units for sale, and bidders specify how many units they want and the per-unit price they want to pay. Bidding takes place progressively over a predetermined time period and the k highest bids at closing win the units at their specified prices. Ties are broken on the basis of quantities first and time of bidding second. Two features make these auctions different from standard auctions. First, unlike "live" auctions with fixed participation costs, entering each bid may be costly in a Yankee auction since bidding takes place over several hours (or days) and, in addition to connectivity cost, several minutes time must spend several registering the new price. Second, each time the bidder visits the auction site, she is uncertain about the competition since it is possible for more bidders to decide to enter before the closing. Here, we derive and characterize equilibrium strategies in simple Yankee auctions with stochastic demand. We show that costly bidding may induce bidders to bid high or jump bid in earlier rounds. These jump bids play a signaling role; they attempt to discourage later bidders from competing with established bidders. This way, under some conditions, both sender and receiver of the signal may be better off in equilibrium. The sender because deterring competition saves her the costs of additional bids, and the receiver because she avoids the costs of fruitless early competition. Here, we derive conditions on bidding costs and bidder types that result in a signaling equilibrium of this nature. We show that the characteristics of the equilibrium are closely related to the structure of demand uncertainty faced by the bidders since signal bidding has more strategic value when bidders anticipate further competition later in the auction. We use data from hundreds of Yankee Auctions to test some predictions of the jump-bidding model. In confirmation, we find (a) over 40% of the bidders in our sample enter jump bids, (b) any individual bidder is more likely to enter a jump bid as his first bid, (c) earlier bidders are more likely to enter jump bids than later bidders, (d) the relative size of a jump bid is increasing in the number of bidders relative to units being sold, and (e) the relative size of a jump bid is decreasing in the object's average value. We conclude with a discussion of the implications of costly bidding and jump-bidding strategies on Internet auction design.

Bidding Strategies in Internet Yankee Auctions

A bidding strategy commonly observed in Internet auctions, though not frequently in live auctions, is that of "jump-bidding," or entering a bid larger than necessary to be a current high bidder. In this paper, we argue that the cost associated with entering on-line bids and the uncertainty concerning bidding competition -- both of which distinguish Internet from live auctions -- can explain this phenomenon. We present a simple theoretical model that accounts for the preceding characteristics, and derive the conditions under which jump-bidding constitutes an equilibrium strategy in a format commonly used for on- line trading, the Yankee Auctionâ. We then present evidence recorded from hundreds of Internet auctions that is consistent with the basic predictions from our model. We find that jump-bidding is more likely earlier in an Internet auction, when jumping has a larger strategic value, and that the incentives to jump bid increase as bidder competition becomes stronger. Several of our results have implications for starting bid and minimum bid increment rules set by Internet auction houses. We also discuss possible means of reducing bidding costs, and evidence that Internet auctioneers are pursuing this goal.internet auctions, bidding costs, jump bidding

Chandra view of Kes 79: a nearly isothermal SNR with rich spatial structure

A 30 ks \chandra ACIS-I observation of Kes 79 reveals rich spatial structures, including many filaments, three partial shells, a loop and a ``protrusion''. Most of them have corresponding radio features. Regardless of the different results from two non-equilibrium ionization (NEI) codes, temperatures of different parts of the remnant are all around 0.7 keV, which is surprisingly constant for a remnant with such rich structure. If thermal conduction is responsible for smoothing the temperature gradient, a lower limit on the thermal conductivity of $\sim$ 1/10 of the Spitzer value can be derived. Thus, thermal conduction may play an important role in the evolution of at least some SNRs. No spectral signature of the ejecta is found, which suggests the ejecta material has been well mixed with the ambient medium. From the morphology and the spectral properties, we suggest the bright inner shell is a wind-driven shell (WDS) overtaken by the blast wave (the outer shell) and estimate the age of the remnant to be $\sim$ 6 kyr for the assumed dynamics. Projection is also required to explain the complicated morphology of Kes 79.Comment: 12 pages, 6 figures (3 in color), ApJ, in press, April 20, 200

On the feedback from super stellar clusters. I. The structure of giant HII regions and HII galaxies

We review the structural properties of giant extragalactic HII regions and HII galaxies based on 2D hydrodynamic calculations, and propose an evolutionary sequence that accounts for their observed detailed structure. The model assumes a massive and young stellar cluster surrounded by a large collection of clouds. These are thus exposed to the most important star-formation feedback mechanisms: photoionization and the cluster wind. The models show how the two feedback mechanisms compete in the disruption of clouds and lead to two different hydrodynamic solutions: The storage of clouds into a long lasting ragged shell that inhibits the expansion of the thermalized wind, and the steady filtering of the shocked wind gas through channels carved within the cloud stratum. Both solutions are claimed to be concurrently at work in giant HII regions and HII galaxies, causing their detailed inner structure. This includes multiple large-scale shells, filled with an X-ray emitting gas, that evolve to finally merge with each other, giving the appearance of shells within shells. The models also show how the inner filamentary structure of the giant superbubbles is largely enhanced with matter ablated from clouds and how cloud ablation proceeds within the original cloud stratum. The calculations point at the initial contrast density between the cloud and the intercloud media as the factor that defines which of the two feedback mechanisms becomes dominant throughout the evolution. Animated version of the models can be found at http://www.iaa.csic.es/\~{}eperez/ssc/ssc.html.Comment: 28 pages, 10 figures, accepted for publication in the ApJ. Animated version of the models can be found at http://www.iaa.csic.es/\~{}eperez/ssc/ssc.htm

The Dipole Observed in the COBE DMR Four-Year Data

The largest anisotropy in the cosmic microwave background (CMB) is the $\approx 3$ mK dipole assumed to be due to our velocity with respect to the CMB. Using the four year data set from all six channels of the COBE Differential Microwave Radiometers (DMR), we obtain a best-fit dipole amplitude $3.358 \pm 0.001 \pm 0.023$ mK in the direction $(l,b)=(264\deg.31 \pm 0\deg.04 \pm 0\deg.16, +48\deg.05 \pm 0\deg.02 \pm 0\deg.09)$, where the first uncertainties are statistical and the second include calibration and combined systematic uncertainties. This measurement is consistent with previous DMR and FIRAS resultsComment: New and improved version; to be published in ApJ next mont

On the ongoing multiple blowout in NGC 604

Several facts regarding the structure of NGC 604 are examined here. The three main cavities, produced by the mechanical energy from massive stars which in NGC 604 are spread over a volume of 10$^6$ pc$^3$, are shown here to be undergoing blowout into the halo of M33. High resolution long slit spectroscopy is used to track the impact from massive stars while HST archive data is used to display the asymmetry of the nebula. NGC 604 is found to be a collection of photoionized filaments and sections of shells in direct contact with the thermalized matter ejected by massive stars. The multiple blowout events presently drain the energy injected by massive stars and thus the densest photoionized gas is found almost at rest and is expected to suffer a slow evolution.Comment: 15 pages (11 text), 4 figures. To be published in Ap