System and Method for Conducting a Recurring Auction Using a Participant Retention Mechanism

Abstract

The present invention includes a method and system for trading goods and services through recurring auctions. Recurring auctions are increasingly popular form of markets for perishable and time-sensitive resources. Traditional auctions strive to motivate bidders to bid their true valuation of the resources traded. Yet, when successful, they also quickly divide the recurring auction bidders into permanent winners and permanent losers. The latter have no incentive to stay in the market, so they leave, decreasing the competitive pressure and depressing pricing. The present invention introduces a novel winner selection method to maintain customers' interest in auction participation that employs participant retention mechanism in assigning traded resources to bidders. The winners are selected from a wider range of bidder ranks than in traditional auction mechanisms. For a group of bidders, winner selection takes into account bid values, and winnings and participation of each bidder in the previous auction rounds.

I claim: 
     
         1 . A method for an auctioneer to allocate perishable or time-specific resources to bids in a plurality of auction rounds, wherein allocating resources to bids in each auction round is executed on at least one computer comprising computer-readable medium with computer executable instructions to perform various computer-implemented operations necessary for timely execution of said allocation, comprising:
 (a) said computer receiving in its storage and thus having available a list of perishable goods or time-specific resources traded in a given auction round, wherein said list of resources to be traded in said given round is ranked according to factors set by the auctioneer and each resource is traded only in said auction round because said resource loses value if not allocated because it is perishable or time-specific;   (b) said computer receiving bids relevant to said auction round wherein each bid comprises a bid price for allocation of one of the resources listed in said list of resources received in step (a), and information identifying a participant bidder making said bid;   (c) for each of said bid prices received in step (b), said computer:
 (c1) establishing probabilities of winning the resource in a single auction round wherein a difference between the probabilities computed for two bids is a non-decreasing function of difference between bid prices of the two bids whereby bidders of these two bids are motivated to raise their bid prices to increase their probability of resource allocation, 
 (c2) sorting said probabilities of winning in order of said probabilities of winning, 
 (c3) not restricting participation in a future auction round based on a participant bidder winning or losing in said given round or in a previous round; and 
   (d) said computer allocating said resources to said bids based on said probabilities of winning established in said step (c), rather than based on said bid prices received in said step (b) by selecting sequentially, in the order the said sorted probabilities in (d), bidders as winners randomly based on their probabilities established in (c), until either all resources are allocated, or the number of unprocessed bidders becomes equal to the number of unallocated resources remaining, in which case the remaining bidders are allocated the remaining resources in the order of their said sorted probabilities.   
     
     
         2 . The method of  claim 1  wherein an auctioneer sets a minimum bid price and step (c1) is executed only for bids with bid prices not lower than said minimum bid price. 
     
     
         3 . The method of  claim 1  wherein an auctioneer sets a maximum number of bids for which step (c1) is executed. 
     
     
         4 . The method of  claim 1  wherein the probabilities assigned to each bid in step (c1) are the non-increasing function of the bid rank. 
     
     
         5 . The method of  claim 1  wherein the same probability is assigned to each bid in step (c1). 
     
     
         6 . The method of  claim 1  wherein the probability of 1 is assigned to each bid in step (c1). 
     
     
         7 . The method of  claim 1  wherein resources traded in each auction round comprise spaces for paid advertisements on at least one internet page. 
     
     
         8 . A method for an auctioneer to allocate perishable or time-specific resources to bids in a plurality of auction rounds, wherein allocating resources to bids in each auction round is executed on at least one computer comprising computer-readable medium with computer executable instructions to perform various computer-implemented operations necessary for timely execution of said allocation, comprising:
 (a) said computer receiving in its storage and thus having available a list of perishable goods or time-specific resources traded in a given auction round, wherein said list of resources to be traded in said given round is ranked according to factors set by the auctioneer and each resource is traded only in said auction round because said resource loses value if not allocated because it is perishable or time-specific;   (b) said computer receiving bids relevant to said auction round wherein each bid comprises a bid price for allocation of one of the resources listed in said list of resources received in step (a), and information identifying a participant bidder making said bid wherein said list of bids is ranked according to bid values;   (c) for each of said bid prices received in step (b), said computer:
 (c1) establishing three classes of bids received in step (b), the highest bids in a Definite Winner class, the lowest bids in a Definite Loser class and the remaining bids in a Possible Winner class, of which only the Possible Winner class must be non-empty; 
 (c2) assigning resources to bids in the Definite Winner class by matching resource to bids with the same rank established in step (a) for resources and step (b) for bids; 
 (c3) assigning the remaining resources in the order of their ranks established in step (a) to bids in the Possible Winner class in the order of their ranks established in step (b) under the condition that they consecutively lost the number of auction rounds k>0, set by the auctioneer, but they sent the same or higher bid for the current auction round; 
 (c4) if any resources are left after step (c3), they are assigned in the order of their ranks from step (a) to bids remaining in the Possible Winner class in the order of their ranks from step (b). 
   
     
     
         9 . The method of  claim 8  wherein an auctioneer sets minimum bid prices for bids that are assigned to the Definite Winner and Possible Winner classes in step (c1). 
     
     
         10 . The method of  claim 8  wherein an auctioneer sets a maximum number of bids that can belong to the Definite Winner class and a maximum number of bids that can belong to the Possible Winner class in step (c1). 
     
     
         11 . The method of  claim 8  wherein an auctioneer sets the number of consecutive losses defined in step (c3) to one. 
     
     
         12 . The method of  claim 8  wherein resources traded in each auction round comprise spaces for paid advertisements on at least one internet page. 
     
     
         13 . A method for an auctioneer to allocate perishable or time-specific resources to bids in a plurality of auction rounds, wherein allocating resources to bids in each auction round is executed on at least one computer comprising computer-readable medium with computer executable instructions to perform various computer-implemented operations necessary for timely execution of said allocation, comprising:
 (a) said computer receiving in its storage and thus having available a list of perishable goods or time-specific resources traded in a given auction round, wherein said list of resources to be traded in said given round is ranked according to factors set by the auctioneer and each resource is traded only in said auction round because said resource loses value if not allocated because it is perishable or time-specific;   (b) said computer receiving bids relevant to said auction round wherein each bid comprises a bid price for allocation of one of the resources listed in said list of resources received in step (a), and information identifying a participant bidder making said bid wherein said list of bids is ranked according to bid values;   (c) for each of said bid prices received in step (b), said computer
 (c1) establishing three classes of bids received in step (b), the highest bids in a Definite Winner class, the lowest bids in a Definite Loser class and the remaining bids in a Possible Winner class, of which only Possible Winner class must to be non-empty; 
 (c2) assigning to bids in the Definite Winner class resources by matching resources to bids with the same rank established in step (a) for resources and step (b) for bids; 
 (c3) computing bid value of each bid in the Possible Winner class in such a way that bid value rewards bids that lost the last action round compared to bids that won the last action round, after which the all bids are ranked according to bid values; 
 (c4) assigning the remaining resources in the order of their ranks established in step (a) to bids in the Possible Winner class in the order of their ranks established in step (c3). 
   
     
     
         14 . The method of  claim 13  wherein an auctioneer sets minimum bid prices for bids that are assigned to Definite Winner and Possible Winner classes in step (c1). 
     
     
         15 . The method of  claim 13  wherein an auctioneer sets a maximum number of bids that can belong to Definite Winner class and a maximum number of bids that can belong to Possible Winner class in step (c1). 
     
     
         16 . The method of  claim 13  wherein bid value v defined in step (c3) is increased from a bid b by an additive increment a, so v=b+a, but only for the losers of the last auction round but bid value is equal to bid b otherwise. 
     
     
         17 . The method of  claim 13  wherein bid value v defined in step (c3) is increased from a bid b by a multiplicative increment m, so v=m*b, for losers of the last auction round, but bid value is equal to bid b otherwise. 
     
     
         18 . The method of  claim 13  wherein bid value is a reward for participation in the current and previous auction rounds and is defined as the score WS i  defined for each bidder ranked i in Possible Winner class as the difference between the product of k-th power of bid ranked i in step (b) and the number of auction round that it participated in divided by coefficient a and the number of winning rounds, that can be expressed algebraically as WS i =b i   k  NP i /α−NW i , where NP, and NW, denote the cumulative number of times that bidder ranked i participated and won, respectively, up to and including the current auction round. 
     
     
         19 . The method of  claim 13  wherein resources traded in each auction round comprise spaces for paid advertisements on at least one internet page.