A Class of Multi-Attribute Auction Transformed into Single-Attribute Auction on Margin Bid

Abstract

Designing a multi-attribute auction can have many advantages especially in concerning different attributes besides price. Nevertheless, the complexity of this method makes it hard to carry out the optimal mechanism. This paper combines the first sealed auction mechanism with multi-attribute auction, and gives a method of transforming multi-attribute auction into single-attribute auction by bidding in deposit. The analysis indicates that this method can just not only reduces the transaction risk caused by suppliers who will abandon the bid, but also makes the multi-attribute auction more easier to implement and operate; Besides, the method meets the incentive compatibility and participation constraint conditions under which the highest bidding supplier will win the auction; On the other hand, it also shows that equilibrium price and equilibrium quality increase as the efficiency parameter increase, but equilibrium delivery time increase when it decrease. More importantly, it is really interesting and inspiring that this method can bring more expected profits to the buyer comparing with traditional auction.