JOURNAL OF SOFWARE, OL. 6, NO. 2, FEBRUARY 2011 281 Study o ricig Model of Olie Auctio uder Competitive Strategy Yu Mi Iformatio echology Applicatio Research Istitute, School of Ecoomic Iformatio Egieerig, Southwester Uiversity of Fiace ad Ecoomics (SWUFE), Chegdu, Chia Email: zqh@swufe.edu.c ubu Zhuoma, Zhou Qihai ad Xu Jig School of Ecoomic Iformatio Egieerig, Southwester Uiversity of Fiace ad Ecoomics (SWUFE), Chegdu, Chia Email: pz009@163.com Abstract E-commerce auctio has the auctio properties ulike ordiary e-commerce trasactios. he olie auctios, allowed biddig, become ito a ew tradig model based o the etwork for the exchage ad auctio techology. his paper firstly gives the overview of the olie auctio pricig mechaism ad itroduces the e- commerce auctio market ad its characteristics o the oe had. O the other had, it discusses the factors affectig the price of olie auctios from three aspects, the iformatio flow, the busiess objectives ad the risk factors. Ad the, it discusses the six types of e-auctio pricig strategy. Lastly, facig the factors ad the differet strategies, it presets the wi-wi pricig model o the olie e-commerce auctio British-based both for auctio operators ad cosumers. Idex erms e-biddig, auctio, pricig strategy I. INRODUCION Olie auctio meas that the idividual ad busiess achieve price egotiatios trasactios via the Iteret. E- commerce auctio allows the pricig competitio, determied by cosumers to value oe particular commodatio, ad biddig, ad the, busiesses choose whether to accept the offer of e-commerce activities. he sellers have icreased competitio through the Iteret tradig patters, so the buyig behavior of cosumers becomes icreasigly complicated ad more cautious for etwork iformatio processig. If the buyers ad sellers ca trust each other ad smooth trasactios, it will be able to brig more beefits for both sides. A. Characteristics of Olie Auctio Market Auctio tradig model, the seller ca decide the type of auctio items ad the commodity prices, but the other buyers ca participate i biddig, ad eve decide the fial sellig price of goods. he auctio site offers tradig platform for the two sides, who ca trade activities i this virtual platform. Sice a web auctio model of web page type is with aroud the clock without rest, coupled with global umber of Iteret users, so the opportuity of auctio merchadise trasactios are more available tha the traditioal auctio market [1. Olie auctio is a ew auctio, which have some ew features ad mechaisms compared to traditioal auctios. Firstly, the olie auctio breaks through the traditioal auctio i time ad locatio costraits, ad it should be more free, more flexible, more efficiet, as well as lower operatig costs ad participatio costs for auctio. Secodly, they have the variety of differet types of auctio items [2. akig ito accout the cost of the auctio, the value of products i traditioal auctio sale is geerally high, while for the olie auctio, its rage ad types of auctios keep up to date with the pace of market demad, cotaiig the works of art o hudreds of millios of dollars, real estate, ad some sack foods o oe or two dollars. Buyers ad sellers ca just be a auctio addictio. hirdly, they have the differet edig fashio. At preset, the olie auctio maily uses two kids of edig fashio. Firstly, it fiished i accordace with the prior ed time of the auctio, such as ebay's auctio rules; ad the other is similar to the traditioal Eglish-style edig way of the auctio rules, "3G" rules, that is, at the ed of auctio, if customers bid, it could also exted the time of auctio, for example, Amazo's auctio rules. Lastly, as the olie auctio cotiues for a log time, most of the websites provided the teder aget to bid a fair ad rigorous way to help customers, which are more coveiet ad effective for participatio i the teder [3. Ad bidders do ot eed to keep i the computer from time to time for auctio progress, which is difficult to achieve i the traditioal auctio. I additio, the bidders also hadle more complex trasactios, so the auctio rules may simultaeously adjust the bid requiremets ad dissemiatio of iformatio. B. Domestic Olie Auctio Market O a global scale, the olie auctio market icludes ebay ad other major players i dozes of auctio sites, ad hot areas are maily i the Uited States ad Europea coutries. Ad e-bay, Yahoo, Amazo, ubid, doi:10.4304/jsw.6.2.281-288
282 JOURNAL OF SOFWARE, OL. 6, NO. 2, FEBRUARY 2011 QXL, ad Overstock six are the leaders i home situatio. With the high-speed growth of aobao ad steady developmet of ebay, the olie auctio users i Mailad Chia have expaded rapidly. Accordig to the statistics showed that by 2006, Chiese registered users of olie auctio have exceeded 30 millio, ad a average aual growth rate is of 43 percet [4. Domestic olie auctio market has the followig characteristics. Iexpesive products occupy about half of the share. here are also a certai amout of high-ed auctio items, such as real estate, but the area is still laggig far behid foreig coutries. I the auctio site, the raks of professioal sellers are stroger, which suggested that C2C mode ad B2B models are iterliked. At the same time, the competitors i C2C platform ad B2B platform apply the availability of resources ad itegratio of the coditios. he olie auctio market i the ext few years will cotiue growth rapidly, ad the size ad turover of the user of olie auctio will be risig fast. So Chia's olie auctio market also eed to stregthe i the competitive mechaism, pricig models, ad credit mechaisms, i order to attract more cosumer market. II. FACORS AFFECING HE RICE OF ONLINE AUCIONS A. Formatig Mechaism of Auctio rice Auctio sites are available to a public space for the sellers, so that the sellers ca provide the product images, product iformatio ad commodity prices of auctio to visitors for referece, ad the more importat is the commodity prices of auctio, ad eve some buyers will cosider the curret bid commodity, bid price, the reserve price ad other price iformatio. he supply ad demad i market determie the market price [5. B. Factors Affectig the rice of Olie Auctios he pricig decisio-makig for commodity is a complex process. Sellers ot oly eed to cosider the cost of goods, as well as may other evirometal factors, so as to the Olie auctios pricig, which will be subject to may factors, such as the impact of exteral factors ad iteral factors, for example, ecoomics, culture, political eviromet, ad the cost of the product itself, eve competitio, as well as demads, time value, ad risk factors. he specific factors ca be summarized as follows. Firstly, decisio-makers obtai the relevat iformatio for commodities through various chaels, which stimulated decisio-makers potetial demad for ivestmet, the there is the impulse to the olie auctio of goods, ad also with pricig decisios for the olie auctio commodity [6. For the use of the Iteret auctio sellers of goods, the pricig decisios of exteral icetives are the iformatio flow, ad iteral motivatio is the ivestmet demad. he iformatio flow o olie auctio of goods cotais the market demad iformatio for the commodity ad historical data related o-lie auctio items. he greater this iformatio flow, the better for pricig decisios of policy makers. Secodly, differet decisio-makers have differet busiess objectives i the use of olie auctios. For example, some sellers hope to improve the corporate image; some sellers I order to operate the log-term busiess o the olie auctio, are willig to sell lowpriced auctio items; ad others wat to wi favorable rates olie. As the auctio sellers the busiess goals are differet, the sellers pricig decisios affect pricig decisios. Ad the differet objectives embodied i the differet pricig decisios, such as maximizig reveue as their goal, the greatest probability of turover as the goal, ad havig log-term busiess goal. Ad lastly, Both for the seller ad the buyer, the olie auctio have risks. Olie auctio basically carried out through the auctio system, ad the virtual etwork ca complete the trasactio ot meetig with each other, so the risks of olie auctios have bee much greater tha the other forms of busiess activity. Because of the electroic media, buyers ad sellers ca ot reach physical trasactio objects, so the greatest risk of olie auctios comes from the trasactio iformatio asymmetry. For the seller, the buyer's credit risk is the most importat risk factors. If the buyers do ot buy goods after biddig, the seller will pay closig costs at this time but did ot sell merchadise. Sites are difficult to prevet a user to register multiple users, ad the user's true idetity is sometimes difficult to ascertai. Ad the buyers fraud is also divided ito categories. For example, a buyer bids for a similar item usig a differet pseudoym, which made the price have icreased because of the multiple teder, ad this also made some potetial buyers ca ot bid. Ad the, i the last momet of the auctio, the buyer would withdraw its high bid, so that he oly eared a very low bid price of goods. Some bidders will reduce the level of competitio through collusio, thereby reducig the trasactio price of goods. I additio, for defective items, buyers may tryig to get a refud before retur a article, but oce a refud, they do ot retur the items. I order to avoid such risks, there are auctio credit evaluatio system, ad third-party hostig services. For example, i order to wi the trust of shoppers, OM ebay lauched a third-party hostig services. Ad o the oe had, the paymet ad delivery process risks ot oly icrease the cost of sellers, but also affect their log-term busiess ad demolish its reputatio. Sometimes, the seller ca ot determie the success buyers will pay or ot [7. O the other had, for the buyers, the risk i the olie auctio process cotais the followig reasos. he security risks i the paymet process, icludig trasportatio costs ad lost timecosumig effort, as well as the risk of olie paymet, is the first risks. Ad the, the purchasers are ot satisfied with biddig goods, which icluded the sellers fraud, for example, o-delivery of goods, ad the false descriptio. If the buyer used a credit card paymet, sellers sometimes have the buyer's ame ad credit card umbers, easily lead to fiacial fraud. he seller uses a better picture tha the actual items, eve false images to describe the
JOURNAL OF SOFWARE, OL. 6, NO. 2, FEBRUARY 2011 283 items to be auctioed. I may cases, the auctio items do ot match the actual goods ad are differet from the buyers uderstadig ad expectatios. Ad eve the sellers icrease the implicit costs i order to make themselves more beefits after the auctio. Lastly, the sellers sell black market items, icludig copies of software, music CD, ad video, which do ot require packig boxes, warraty certificate, ad istructios [8. C. he Impact of Auctio Evaluattio for ricig Aother feature, valued by participats i olie auctios, is the user ratig system, the credibility of the evaluatio system. Most auctio sites have established a credit ratig system to record each user's trasactios i the past received evaluatios, which coverted to a reputatio score through weighted average method, represetig the users credibility i a virtual tradig market. Relevat research from ebay, acquired by OM, argued that the higher the score of the seller's reputatio, the greater the likelihood auctio [9. As buyers ad sellers are subject to sites reputatio evaluatio system, a seller's credit scores olie trasactios have become a importat decisio variable [10. While for the trasactio price of the auctio i terms, the study foud that the buyer's bid is directly related to the valuatio of the goods, but there is o sigificat cotact with the seller reputatio. III. HE YES OF ONLINE AUCION RICING SRAEGY raditioal auctios are divided ito four basic types, Eglish auctio, Dutch auctio, first-price sealed auctio ad secod-price sealed-bid auctio. Based o the auctio of the traditioal classificatio, olie auctios are divided ito the followig several types. Olie Eglish auctio is a forward auctio format, whose rules cotai that the secod bidders bid higher tha the previous oe, ad the highest bidder obtai the right to purchase merchadise whe the auctio reached the biddig deadlie [11. I the auctio process, bidders ca browse through the history of the price to determie their maximum bid o the items to the system. Whe the auctioeer gradually made up-outcry ad the bid is higher tha the highest bid i the real psychological valuatio, oe perso is refused, ad the other oe will success [12. Olie Dutch auctio is a public auctio of price reductio. Dutch auctio trasactios are large amout of items mostly [13. If a seller has a large umber of idetical items to sell, he ca use the reverse auctio format. Differet from the traditioal Dutch auctio, olie Dutch auctio priciple is: i the absece of the price declie, at the ed of the geerally biddig deadlie, the highest bidder get the umber of commodities as he eeds, ad if there is residual goods, they was take up by the secod highest bidder[14. I the auctio process, the buyer ca accept all outcries below their psychological valuatio, ad i order to maximize retur, he ca also choose to outcries close to other buyers psychological valuatio. Collective bargaiig is differet from the traditioal type of olie auctios, which is o biddig process [15. he auctio website provided the collective price based items price, startig price, ad the, a large umber of buyers costitute a large shoppig group ladig the seller registratio form before the items idicated by the umber of differet levels. he more the umber of buyers, the price will be lower, but usually there will be a miimum price [16. Bargai hutig buyig is ulike a traditioal auctio. I this trasactio form, buyers ca ot joi the olie auctio bid for goods temporarily, but chose price paragraph accordig to the goods price curve. Oce the commodity prices shoot dow o this price segmet, the system will sed a otificatio, tellig buyers that the umber of the curret collectio has reached the price he wated, ad he would joi a collective automatically. Reverse auctio is pricig from the seller, which competes for the chaces that the sellers provide cosumers with services [17. Reverse auctio ca provide cosumers demad for the products, service demad ad price positioig, as well as other related iformatio, ad the, the busiesses o a competitive basis decided the fial product ad service providers, which eable cosumers to achieve optimal performace ad low cost. Buy it Now meas that the seller fixed the price of the goods before the trasactio, so buyers have o room for bargaiig. After completio of the trasactio, buyers paid accordig to a price. If the seller sold more tha oe commodity, the trasactio will cotiue util the buyer to purchase all the goods. I 1981, Myerso, Riley ad Samuelso showed that the geeral coditios of ickrey reveue equivalece theorem [18. I may risk-eutral potetial buyers, the private valuatio of auctio is subject to a commo icreasig distributio ad idepedet of each other, ad the the auctio will have the same expectatios of icome based the followig coditios. he buyer with the highest sigal is always a wier; the remaider of their expectatios is zero for all the buyers with the lowest valuatio. With this coditio, uder the complete iformatio of olie auctios, the results of sigle auctio are the same for the differet types, that is, the traded price is the secod highest psychological assessmet, ad the sellers earigs is also the secod highest psychological assessmet [19. I. HE WIN-WIN RICING MODEL ON HE ONLINE E- COMMERCE AUCION A. ricig Makig Idex System here are these followig prerequisites studied i this paper o the olie auctio items. (l) he o-lie auctios items used the olie Eglish auctio way, there is proxy biddig mechaism. (2) Whe the seller vedors wat to sell the goods uder the olie auctios merchadise, a auctio of the film for a umber of auctio items is a sigle piece for every customer.
284 JOURNAL OF SOFWARE, OL. 6, NO. 2, FEBRUARY 2011 (3) here are the iitial decisio-makig aalysis uder the auctio, while settig the startig price q ad the reserve price r. (4) he miimum bid icremet is ( >0), which offers customers the smallest icremet give i advace ad fixed. (5) he seller of olie auctio of goods does ot set the duratio of the auctio automatically, that is ear the ed of the auctio, buyers bid withi a few miutes, the auctio ed time will ot automatically be exteded. (6) he buyers are ratioal ad experieced, who participate i the auctio, ad the valuatio of goods from the buyer is the highest price of goods willig to pay for the auctio. he mathematical modelig of auctio of goods o the olie auctio pricig decisio-makig process ivolves a series of idicators. Ad the modelig of variables eeds to use a precise defiitio, specifically as show i able I. Idex q R ABLE I. RICING MODEL INDEX ABLE Defiitio he startig price q he maximizig the retur r he reserve price r. he miimum bid icremet he etire time legth he each time poit he curret commodity prices he commodity's price at the ed of auctio N he maximum rate of ew etrats upper limit h F() he customer valuatio distributio fuctio he rate of ew etrats upper limit K he umber of times from the reserve price r to the maximum he seller's utility of the auctio of goods; m the opportuity cost of the commodities prices O he cost of sellers to list the auctio items, C d whose value is ralated with reserve price; he pay of sellers after closig the trasactio s C c ( ) costs, he iterest factor M is for of the opportuity cost; he risk factor of the opportuity cost M ri he fial price of auctio items he fial trasactio price B. he ime Factors of Wi-wi ricig Model o E- commerce Olie Auctio Olie auctio pricig decisio-makig process is a dyamic process, ad oe part of the auctio process i the olie auctio of goods, which will be step i lie with the auctio process, ad this decisio-makig starts from the registratio of the auctio items ad exteds to the ed time of arrival of the auctio [20. he time factor is oe importat factor to cosider for the seller whe he made pricig decisios, because it directly affects the valuatio of goods for auctio buyers. If the bidders have sufficiet time to participate i the etire process of the olie auctios merchadise, he ca raise the price by the bid rate i olie auctios miimum gradually util it reaches the highest auctio items he was willig to pay for the goods. Ad if the other buyers bid the goods beyod the highest auctio items he was willig to pay for the goods, he will withdraw from the auctio. akig ito accout the olie Eglish auctio rules, if multiple buyers bid for the same price, the auctio will make the distributio of auctio items accordig to rules of "first offer, first served" [21. herefore, the buyer looks to be successful i the auctio of goods, the optimal biddig strategy is to pay the price of goods by the origial itet of the auctio to the goods valuatio, of course, he also eeds takig ito accout risk factors. herefore from the comprehesive aalysis of two poits above, the optimal biddig strategy of the bidders who participate i the process of olie auctios of goods is to pay the highest price he will willig to for its valuatio of the goods. he valuatio of goods from bidders will affect the seller's pricig decisio-makig, followig o the bidder's valuatio aalysis. Customer valuatio of auctio s goods will subject to the followig two factors. (l) Bidders are the origial valuatio of secod-had goods, which is ot subject to ay factors that impact the valuatio of secod-had goods. (2) Bidders degree of ifluece by the outside iformatio, where the exteral iformatio icludes secod-had goods market prices ad demad, olie auctios have bee carried out i time, olie auctio, the curret price of secod-had goods, has the frequecy of bids. Whe the bidder has ot received ay price outside iformatio, the bidders were ot other factors impact o the valuatio of goods for auctio is still the origial valuatio [22. Whe the bidders were able to obtai ad olie auctios auctio items related to all the iformatio, the bidders were the valuatio of goods for auctio oly with the obtaied iformatio about the outside world, but its valuatio of the auctio items urelated to the origial. Actually i the process of olie auctios auctio merchadise, the customer is ot possible to obtai all the market iformatio, but ca oly get part of the market iformatio, so iformatio o the bidder's valuatio of the outside world there is some of the impact. he umber of bidders, such exteral factors ca be performace through the time idirectly. As time progresses, the customer arrival rate will be certai, ad the umber of bidders ad the umber of biddig will icrease, ad the the most visible maifestatio is that the curret prices of the auctio of goods will icrease i the auctio process as time progress. herefore, i the mai aalysis time here, the potetial bidders for the impact of huma valuatio.
JOURNAL OF SOFWARE, OL. 6, NO. 2, FEBRUARY 2011 285 As time progresses, the customer arrival rate certai circumstaces, has led to the curret commodity price icreases the auctio. Network opeess of iformatio, allowig ew etrats ito the auctio process, bidders ca see i frot of all the bidders who bid situatio, access to part of the price iformatio. At the same time, ew etrats ito the potetial bidders who bid the psychological as time progress, the curret price icreases have take place i the followig chages. (l) he o-lie auctios bidders, who has bee etered the auctio, have to bid o auctio items, which will result i the icreasig prices of auctio items. he potetial ew etrats ito the auctio system will fid existig prices of goods ad competitors from the auctio bidders i the state of competitio i the auctio items, ad also will estimate the price of the auctio s items i the future. herefore, ew etrats bidders who produced the successful psychology ad will also icrease the valuatio of its auctio items accordigly i the fierce competitio. (2) he ew etrats bidders will make out the price aalysis to those successful bid of bidders etered the olie auctio system, ad foud there were some affirmatio from the other bidders for the auctio i the value of goods. hese kids of cosesus o the auctio value of the goods will certaily the auctio system, the valuatio of potetial bidders who played the role of positive feedback, makig it to the auctio to icrease the valuatio of goods. (3) At the begiig of the olie auctio process, the startig price of the referece price of bidders ito the auctio system is q. As time progresses, the curret price of the auctio items rise, potetial bidders etered the auctio process will bid i the higher prices, so the auctio referece price will be the curret price of goods. By referece to prices, ew etrats to the Bidder at this time tha the first valuatio of the bidder to eter the valuatio have icreased [23. his shows that the bidders were o the auctio items will be subject to a time limit of the valuatio factors. As time progresses, at each momet the curret price of auctio items may be differet, eter the olie auctio items to the auctio process, bidders were the valuatio of goods icreased. Because of the coveiece of olie auctios, bidders, who bid for each process, may oly sped a few miutes or eve a few secods time, ad the process of olie auctios of goods is usually a few days ago. I accordace with the time cosumed by each bid, the auctio process ca be divided ito multiple stages, which reflects the impact to the time o the bidder's valuatio. his paper divided whole process of olie auctios of goods ito N stages, each time poit is of. As able I shows, the etire time legth of olie auctios of goods with N +1. I each momet, the commodity's curret price is N. At this time, the ew potetial bidders ito the auctio process are subject to the curret commodity prices, the valuated rage is [0,. As time progresses, ew etrats will bid withi the rage at the time, which resulted i the ext momet 1, ad the curret commodity prices 1, ad the, the ew price oce affected the ext time the valuatio of the scope of the bidder agai. After such a cycle, at the ed of the auctio time, the fial auctio price formed for terms. So the fial price was decided by the scope of the bidder's valuatio decisio o the last time. ABLE II. AUCION COMMODIY RICES AND HE SCOE OF HE BIDDER'S ALUAION OER IME Auctio time 0 1 2 Scope of bidder's valuatio Auctio commod ity prices [0, 0 q [0, 1 [0, 2 1 2. -1 [0, -1-1 1 [0 [0,, 1 1 N [0, N he above aalysis shows that each bidder who bid the auctio of goods must sped a certai time. As time goes o, the curret prices of auctio goods icreased, so the ew auctio bidders also icreased the ceilig for the valuatio of goods. Supposed i each momet, the maximum rate of ew etrats upper limit for the curret auctio are the same to the rate of price of goods. herefore, i the time, Bidders upper limit o the valuatio of goods for auctio are as follows: 1 1 ; 1 1 ( 1 )( 1 ) 1 1 Based o the above formula, it ca obtai each time o-lie auctio process ad the auctio limit of ew potetial bidders ito the auctio process. I the solvig process of, firstly, they eed to determie 0. hroughout the auctio process with all etered ito the auctio process, potetial bidders were related to the valuatio limit. As the olie auctio startig time, to eter the auctio system, all potetial bidders were Bidders oly a small part, so the valuatio of start time, Bidders is also far less tha the iitial valuatio of the ceilig limit. Uder ormal circumstaces, 0 is the 50 percet of. he above formula shows that, as time icreases, bidders who bid for goods, makig the curret commodity prices, further also affected ew etrats the scope at this momet, ad allowig ew etrats ito the auctio biddig process, icreased the ceilig of huma N
286 JOURNAL OF SOFWARE, OL. 6, NO. 2, FEBRUARY 2011 valuatio, ad the the ext momet commodity prices improve. C. he Wi-wi ricig Model o he Olie E- commerce Auctio I the curret auctio mechaism, the seller ca decide the lowest price level he is willig to sell this product, amely reservatio price. Whe the cosumer is willig to bid higher tha this reservatio price, this trasactio ca be effective immediately. However, cosumers ca oly kow whether the seller had set the reservatio price, but will ot kow what the reservatio price is, so the highest bid of the purchaser must be higher tha the reservatio price set by the seller, which meas the deal is a success. For the other model, if the buyer purchase the goods based o the direct purchase price set by the seller, this trasactio will ed immediately. Myerso theorem proved that i maximizig the price of the auctio seller, optimal auctio is with a price discrimiatory i the case of asymmetric iformatio. herefore, whe both sides eded the trasactio, they ca ope Web platform to give advice ad evaluatio, so that both sides ca maitai the security of trasactios, but also provides a referece to the future of cosumer trasactio basis. If the model makes maximizig their earigs as the targets of the auctio pricig decisios based o a wiwi decisio-makig betwee the sellers ad the customers, the aim of the pricig decisio-makig o olie auctio items cotais the performace goals ad time targets for reveue, ad time objectives ca also idirectly through the opportuity cost that is also a seller as part of the proceeds. Ad at the same time, the time goals ca also improve the efficiecy of auctio trasactio, so as to wi the retur buyers. Based o the time factors of wi-wi pricig model o e-commerce olie auctio, he wi-wi pricig model o the olie e-commerce auctio is as follows. Max R p[ C ( r) C ( ) O s. t. M ; r; 0 q r K O M k * m N -r d * i k i1. ; O ri c ; p ri; p[ C ( r) O R his model is based o maximizig the retur as the model s objective ad decisio variables is the reserve price. Amog them, p ad p idicated that olie auctio trasactios probability ad the probability C d of o-traded goods respectively; is for the cost of sellers to list the auctio items, whose value is related d C c ( ) with reserve price; is for the pay of sellers after closig the trasactio s costs, ad its value is related with the fial auctio commodities price, which is a fuctio of the reserve price r as variables, ri is the various possible price i the trasactio, p * k ri is the probability of the various possible price. is the umber of times from the reserve price r to the maximum of customers i the fial valuatio; is as bidder's m the smallest rate of icrease price; O is for the seller's utility of the auctio of goods; is for the opportuity cost of the commodities prices ;, are the iterest ad risk factors respectively of the opportuity cost; M is for the fial price of auctio items, which the seller ca accept. his model is about a geeral model o the auctio merchadise pricig decisios of olie auctios, ad through solvig this model, it ca achieve the reserve price r of pricig decisios to maximize satisfactio the auctio trasactio reveue, which ca be solved specifically through the followig method. he aalysis of historical data ad experimetal method ca determie the customer valuatio distributio fuctio F(). Firstly, uder the iitial valuatio [ q, all potetial bidders may reach the expectatios price whe the auctio time arrives. As the etwork proxy mechaisms exist, Bidders would bid his true valuatio. But the etwork showed the rate is a rise, so the fial trasactio price is ot the highest price of the auctio bidders who are willig to pay for goods. o facilitate the calculatio, the bidder of the auctio items were valued as the smallest divisible umber of the rate. All potetial bidders by makig products people are willig to pay the highest price { 0,,2,..., q, q, q 2,..., r, r,... }. herefore, the last possible auctio price is a collectio * { r, r,... } of discrete radom variables, i [0, k k ad * N -r ri. Ad the it ca get the fial trasactio price accordig to customer valuatio distributio fuctio F(). Usig the all expect formula, if the seller determied the startig price q ad based o the reserve price r, combied with the seller ad the real riskbearig capacity of the bidder's psychoaalysis, the bidder will choose the right pricig strategies, such as the matissa pricig strategies, ad determie the fial reserve price ad the expectatios of the price of auctio items. Whe the two sides fiished the trasactio, the customers ca give advice ad evaluatio o the ope Web platform, which ca also maitai their trasactio,
JOURNAL OF SOFWARE, OL. 6, NO. 2, FEBRUARY 2011 287 security, but also provide a referece to the future of cosumer trasactio basis. I this model, the auctio edig time is for the ed time of the auctio, but i the actual situatio, the auctio process ca ed at ay oe time for aalysis, ad reach the decisio-makig momet for meetig the sellers satisfactio, thus ed olie auctio process at ahead. herefore, i the practical implemetatio of the pricig decisio-makig process, decisio-makers eed to make further adjustmets to adapt to the chages i olie auctios progress. For the cosumers, at this time, the time efficiecy of auctio trasactio is greatly ehaced, reducig the opportuity costs of both sides, makig the buyer's expected surplus as zero. he reserve price of goods ad auctio items prices at this time ot oly reached the reveue maximizatio, but also improve the efficiecy of the etire auctio, which ca be said to be a wi-wi strategy for the auctio.. CONCLUSIONS I coclusio, firstly, olie auctio operators eed to maitai a good reputatio. he purchase price, curret bid ad the seller's ratig preseted iteractios. Whe the seller operators maitaied a good evaluatio, the direct chages i the level of the purchase price will also affect the willigess of cosumers the bid price level. However, if the sellers have a egative evaluatio, the product was ot so easy to attract cosumers to bid to buy. hus, cosumers gave the sellers evaluatio, which is a very importat resource, so olie auctios operators eed to maitai a good evaluatio scores properly. Secodly, solvig the credit problem ca reduce risk of olie auctio eviromet, addressig iformatio privacy, itegrity, ad o-repudiatio, eve idetificatio, as well as the security i the logistics ad paymet processes. Chia is goig the costructio of the smart ID card to establish security autheticatio mechaism, which will has played a certai role to reduce the risk of olie auctios. Bidders for the specific attitude towards risk of the auctio items reflected i the valuatio of the degree, the less tolerace for risk, the lower the valuatio of goods for auctio. O the cotrary, the greater the customers tolerace for risk is, the valuatio of goods for auctio is closer to the origial valuatio. But for the sellers specific attitude towards risk, if their tolerace for risk is greater, the set reserve price will be lower. he cosumers have differet buyig behavior accordig to the differet sources of iformatio. Nowadays, the iformatio of olie auctios provided is very rich, so how to select useful iformatio is a key factor for cosumers. here are too may risks ad ucertaities coupled with olie auctios, so the relatioship of trust betwee people is the most basic cosideratio. If the sellers were able to provide the best products ad services, as well as produce the best service reputatio, they will be able to improve their competitiveess, ad at the same time, cosumers will also icrease cofidece ad attitudes i order to ehace the buyig opportuity for higher beefits. I Chia, the costructio of smart ID card are establishig, ad the security autheticatio mechaism i Certificatio Ceter will reduce the risk of olie auctios auctio merchadise ad play a certai role. he specific attitude of bidders towards risk of the auctio items ca be reflected i the valuatio of the degree, the less tolerace for risk, the lower the valuatio of goods for auctio. O the cotrary, if the tolerace for risk is greater, the valuatio of goods for auctio will be closer to the origial valuatio. he specific attitude of sellers towards the risk ca be reflected i the reserve price. If the sellers have greater tolerace for risk i the similar objectives agreed uder the premise of the auctio, the set reserve price will be lower. Ad o the cotrary, if the tolerace for risk of seller is smaller, the set reserve price will be higher. For the differet sources of iformatio, cosumers have differet buyig behavior. Nowadays the iformatio of the olie auctios preset is very rich, so how to select useful iformatio out to cosumers is a key factor. Ad the, there are too may risks ad ucertaities, the relatioship of trust betwee people are the most basic cosideratio. If the seller were able to provide the best products ad services to produce, the best service reputatio will be able to improve their competitiveess, ad cosumers will also icrease cofidece ad attitudes i order to ehace the buyig opportuity for mutual access to higher beefits. A auctio mechaism ivolves two parts, the allocatio rules ad the pay rules. he distributio rules i the stadard auctio are the same, amely, the highest bidder will be successful, while the paymet rules are chagig, but the chage of the paymet rules i the model uder the assumptio does ot affect the expectatios of the auctio bidders expected earigs ad expeditures, the impact is bidders equilibrium biddig strategy. Lastly, a auctio mechaism cotais two parts, the locatio rules ad payig rules goverig. Distributio rules i the stadard auctio are the same, while the paymet rules are chagig. But the chage of the paymet rules does ot affect the expected earigs ad expeditures of the auctio bidders, but bidders equilibrium biddig strategy. REFERENCES [1 Lei Wag Xia-A is equivalet to the stadard icomebased auctio biddig strategy equilibrium study, Joural of Wuha Uiversity of echology. olume 31, No. 11, Jue 2009 [2 Jiag Yig, 2007, Aalysis of auctio pricig strategy, rice heory ad practice. 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288 JOURNAL OF SOFWARE, OL. 6, NO. 2, FEBRUARY 2011 [7 Kristy E. Reyolds, James H. Gilkeso, Roald W. Niedrich, he ifluece of seller strategy o the wiig price i olie auctios: A moderated mediatio model Joural of Busiess Research, olume 62, Issue 1, Jauary 2009, ages 22-30 [8 Li LI, Yua-a LIU, Kai-mig LIU, Xiao-lei MA, Mig YANG, ricig i combiatorial double auctio-based grid allocatio model, he Joural of Chia Uiversities of osts ad elecommuicatios, olume 16, Issue 3, Jue 2009, ages 59-65 [9 Bret Hickma, O the pricig rule i electroic auctios, Iteratioal Joural of Idustrial Orgaizatio, I ress, Corrected roof, Available olie 27 October 2009 [10 asudeva Akula, Daiel A. Meascé, wo-level workload characterizatio of olie auctios, Electroic Commerce Research ad Applicatios, olume 6, Issue 2, Summer 2007, ages 192-208 [11 De Liu, Jiaqig Che, Desigig olie auctios with past performace iformatio, Decisio Support Systems, olume 42, Issue 3, December 2006, ages 1307-1320 [12 racy A. Suter, David M. Hardesty, Maximizig earigs ad price fairess perceptios i olie cosumer-tocosumer auctios, Joural of Retailig, olume 81, Issue 4, 2005, ages 307-317 [13 Jia Che, Robert J. Kauffma, Yuhui Liu, Xipig Sog, Segmetig ucertai demad i group-buyig auctios, Electroic Commerce Research ad Applicatios, I ress, Corrected roof, Available olie 9 March 2009 [14 Y.S. Kim, Maximizig sellers welfare i olie auctio by simulatig bidders proxy biddig agets, Expert Systems with Applicatios, olume 32, Issue 2, February 2007, ages 289-298 [15 Byugtae Lee, Hyugju Cho, Myugsi Chae, Seoyoug Shim, Empirical aalysis of olie auctio fraud: Credit card phatom trasactios, Expert Systems with Applicatios, olume 37, Issue 4, April 2010, ages 2991-2999 [16 Ha Zhag, Haizheg Li, Factors affectig paymet choices i olie auctios: A study of ebay traders, Decisio Support Systems, olume 42, Issue 2, November 2006, ages 1076-1088 [17 Hsi Hsi Chag, ask-techology fit ad user acceptace of olie auctio, Iteratioal Joural of Huma- Computer Studies, olume 68, Issues 1-2, Jauary- February 2010, ages 69-89 [18 Myerso, RB. 1981, Optimal Auctio Desig, Mathematics Operatios Research, 6 (1) :58-73. [19 ichery, W. 1961, Couter speculatio, Auctio, ad Competitive Sealed eders, Joual of Fiace, (16) :8-37 [20 Daw G. Gregg, Steve Walczak, Auctio Advisor: a aget-based olie-auctio decisio support system, Decisio Support Systems, olume 41, Issue 2, Jauary 2006, ages 449-471 [21 Chao-sug Ho, Robert J. Kauffma, Hsiagchu Lai, Icetive mechaisms, fairess ad participatio i olie group-buyig auctios, Electroic Commerce Research ad Applicatios, I ress, Corrected roof, Available olie 24 December 2008 [22 Ilke Our, Kerem omak, Impact of edig rules i olie auctios: he case of Yahoo.com, Decisio Support Systems, olume 42, Issue 3, December 2006, ages 1835-1842 [23 Yig-Feg Kuo, Shih-ig Ye, Lig-Hsiu Che, Olie auctio service failures i aiwa: ypologies ad recovery strategies, Electroic Commerce Research ad Applicatios, I ress, Corrected roof, Available olie 15 September 2009 Yu Mi, School of Ecoomic Iformatio Egieerig, SWUFE (Southwester Uiversity of Fiace ad Ecoomics), Chia. She graduated i 1982 from UESC (Uiversity of Electroic Sciece ad echology of Chia), Chia. Her research iterests are i computer applicatio ad e-commerce. ubuzhuoma, bor i Lhasa, ibet i 1982, works i ibet Uiversity, master degree, studies i fiacial ad tradig e- busiess i Southwest Uiversity of Fiace ad ecoomy of Chia. Her research iterests is i e-commerce. Zhou Qihai is a Full rofessor (from 1995), Doctor s (ad Master s) tutor ad a head of Iformatio echology Applicatio Research Istitute, School of Ecoomic Iformatio Egieerig, SWUFE (Southwester Uiversity of Fiace ad Ecoomics, Chia). He graduated i 1982 from Lazhou Uiversity, Chia; has bee workig i SWUFE sice 1982, fillig posts from eachig Assistat (1982-1987), lecture (1987-1991), vice professor (1991-1995, promoted aomaly i 1991), professor (1995-today, promoted aomaly i 1995); ad got the titles of both Outstadig experts (ejoyed govermet subsidies) with outstadig cotributios of Sichua provice, Chia (summa cum laude of Sichua provice govermet, 1996) ad Oe hudred academic ad maagerial leadig heads of Chia iformatioalizatio (summa cum laude about this field i Chia, 2006). He has published 47 academic books ad 218 academic papers; ad is Chair or Orgaizig Chair of some importat iteratioal cofereces. His research iterests are i algorithm research, computatioal geometry, isomorphic iformatio processig, ecoomics & maagemet computatio, ebusiess, ad so o. More about rof. Zhou Qihai is show here: http://www.iitaa.com/member-zhouqihai.doc Xu Jig, bor i Hohhot, Ier Mogolia i 1985, master degree, studies i fiacial ad tradig e-busiess i Southwest Uiversity of Fiace ad ecoomy of Chia.