Fuzzy formulation of auctions and optimal sequencing for multiple auctions

✍ Scribed by Shu-Cherng Fang; Henny W.L. Nuttle; Dingwei Wang

• Publisher: Elsevier Science
• Year: 2004
• Tongue: English
• Weight: 319 KB
• Volume: 142
• Category: Article
• ISSN: 0165-0114
• DOI: 10.1016/s0165-0114(03)00127-1

✦ Synopsis

Current research on auctions is mainly based on the game theory. In the ÿrst part of this paper, we propose a fuzzy set based formulation of auctions. We deÿne fuzzy sets to represent the seller and buyers' valuations, bid possibilities and win possibilities. Analyzing the properties of these fuzzy sets, we study fuzzy versions of discriminating and nondiscriminating bidding strategies for each bidder in a single-object auction by using Bellman and Zadeh's concept of con uence of fuzzy decisions instead of the game theoretic Nash equilibrium. The monotonically decreasing membership function replaces of the corresponding distribution density function in Milgrom and Weber's auction theory. In the second part of the paper, we develop a soft computing approach to maximize the seller's revenue in multiple-object auctions through the use of object sequencing. The proposed sequencing approach is based on "fuzzy rule quantiÿcation". Numerical experience shows the potential of the proposed approach for application in practical auctions.