| Abstract
|
:
|
Auction systems typically involve the bidders, sellers and the saleable items; all of which have critical impacts on the overall revenue and pricing. Overall, the two major stratagem forums explored are the Second Price Auction (SPA) and the First Price Auction (FPA) systems. SPA refers to a bidder offering a one time maximum allowable bid and the highest winner pays the second highest price. In contrast, the FPA approach to bidding promotes competitor awareness of the current posted price. The bidders have the option to re-bid, the highest bidders wins and pays the price he/she offered. This thesis utilizes a unique approach in the investigation of both the SPA and FPA methods to determine which of the two offers the best price. The best price considered is in focus of the bidders whose principal intent is to win the auction by minimizing the cost of expenditure. Statistical modeling and simulation methods are used to determine the differences between the SPA and the FPA systems. Major parameters directly engaged with the auction process (i.e., auction duration, bid proportion, and opening cost) are scrutinized to determine their impact on the final price, the number of bidders, and the number of re-bids. The results from this research indicated that the SPA generally offers better prices than the FPA, (i.e., the highest price in SPA is generally lower than that in the FPA). In addition, the SPA has the highest number of bidders generated. This indicates that, the SPA is mainly influenced by the auction duration but not the bid proportion. Furthermore, the lack of information about other competitors has resulted in marginal variations in offered prices. This perhaps is caused by bidders offering a one time bid which can sometimes be lower than the market price. On the other hand, the FPA is mainly affected by bid proportion, auction duration, and opening cost. An increase in these variables generally causes an increase on the final price. In order for bidders to minimize cost, the choice of auction format must be taken into consideration and the strategies involved should be explored. More emphasis should be placed on the auction duration. This research, has showed that the SPA is a more effective method for minimizing cost for bidders when compared to the FPA.
|