Design of Auctions for Electronic Business

Auctions are important market mechanisms for the allocation of goods and services. Auction theory has caught tremendous interest from both the economic side as well as the Internet industry. The popularity of auctions and the requirements of e-business have led to growing interest in the development of complex trading models. Design of auctions is a multidisciplinary effort comprised of contributions from economics, operations research, informatics, and other disciplines. Combinatorial auctions have recently generated significant interest as an automated mechanism for buying and selling bundles of goods. They are proving to be extremely useful in numerous e-business applications. Important issues in the design of combinatorial auctions are presented. Iterative combinatorial auctions with multiple criteria are proposed complex trading models. The iterative procedure is composed of three key components: a preference model, an optimization model, and a negotiation model.