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Published byKelly Norman Modified over 9 years ago
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Andrew Nizamian and Jeff Herman
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20 million members Uses Games on Demand Exclusive Content Video Store Indie Games Zune Points sold in discrete packages Approximately 80 points = $1
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Let us impose a sealed-bid auction where participants have affiliated valuations and private budget constraints Why? Xbox Live points are non-redeemable People have leftover points, since purchases are made in discrete packages Plays into the gamer mentality More profitable than the current ‘first-come-first-serve’ basis for new content release
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Find the auction model most profitable to the Xbox Live Marketplace Find the optimal bidding strategy for the consumer
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Andelman, Nir, and Yishay Mansour. "Auctions with Budget Constraints." CiteSeerX. School of Computer Science, Tel-Aviv University, 23 Dec. 2003. Web. 6 Nov. 2011.. Borgs, Christian, Jennifer Chayes, Nicole Immorlica, Mohammad Mahdian, and Amin Saberi. "Multi-unit Auctions with Budget- Constrained Bidders." Http://research.microsoft.com/. Microsoft, 16 Oct. 2001. Web. 6 Nov. 2011.. Kotowski, Maciej H. "First-Price Auctions with Budget Constraints." Department of Economics, University of California, Berkeley (2011). Web. 5 Nov. 2011..
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These introduce two competing effects on bidding The direct effect: Depression of bids as participants hit their spending limit The strategic effect: Aggressive bidding from participants with larger budgets
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Two-part question Determine which model maximizes profit for Xbox Live Investigate which strategies are best for agents within a given model Answer using computational simulation Evaluate performance of bidding strategies/heuristics Test multiple auction environments e.g. First-price vs. Nth-price Implement novel strategies and/or strategies found in literature
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We anticipate that the most profitable auction scheme for selling multiple units of a good (e.g., a limited release of a map-pack) will be a sealed-bid Nth-price auction For single goods, a standard sealed-bid second-price auction should be the most effective Caveat: Xbox Live doesn’t profit from the points being spent, they profit from the points being bought We expect the most effective bidding strategy will be aggressive bidding with a large initial budget Side Note: Perception of the Winner’s Curse
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Simulation with human participants, and qualitative measures of valuation Simulations (digitized and real) allowing for repurchasing periods between auctions
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