Internet Auction System

Abstract

Various methods and systems for auctioning mutually exclusive items such as golf tee times, restaurant reservations, concert tickets or hotel reservations are disclosed. Mutually exclusive can refer to items that cannot be possessed simultaneously because of physical limitations or to multiple items that could be simultaneously physically possessed but the bidder would only want possession of, at most, one of the items. An electronic auction method therefore performs the following operations: (1) an ordered processing of ranked bids to compare currently active bids with current winning bids to determine the new winning bids; (2) notifying unsuccessful bidders via e-mail to increase their bids; (3) comparing the new bid amount to all outstanding active and winning bids if the unsuccessful active bid is increased; (4) designating the active bid an inactive bid and designating the next highest ranked bid as the user's current active bid if the unsuccessful bid is not increased in the allotted time; and, (5) continuing the protocol until all bidders either have a winning bid or no remaining active bids. An auction system includes a Central Auction Controller (CAC) that allows sellers to list items for auction and users to enter bids and rank orderings. The CAC maintains a central database comprising a database of user information, a database of items and bids and a database of vendor information. Administration of the system is accomplished via an I / O device and CPU and an optional e-mail processor allows automated messaging to users. This methodology allows users to effectively bid on a large number of mutually exclusive items but receive at most one item at the end of the auction. This method has the favorable effects for the users of: (1) increasing the probability of successfully bidding for at least one item; (2) making the auction process more convenient by greatly reducing the need for actively monitoring the auction; and, (3) decreasing the possibility a user will be out bid at the last moment and receive no item. This method has the favorable effects for the seller of increasing the probability their listed items will sell and increasing the expected average sales price.

Description

FIELD OF THE INVENTION [0001] The present invention is directed to systems and methods for performing automated auctions, and specifically those auctions involving bidding on items that are somewhat mutually exclusive, and / or those types of auctions which are resolved on a collective basis with reference to more than one demand constraint provided in a bid. BACKGROUND OF THE INVENTION [0002] The practice of online auctions has grown at a dramatic pace. Auction sites have been developed for a wide range of products. This has resulted in an active, dynamic pricing environment for many products. The standard auction practice may result in the maximization of the seller's revenue in some instances. Additional information on electronic auction and bidding systems can be found in such U.S. patents as U.S. Pat. Nos. 6,041,308, 6,021,398, 6,012,046, 6,012,045, 5,924,082, 5,835,896, 5,845,266 and 5,689,652, which are hereby incorporated by reference herein. Commercial examples of auctions sy...

AI Technical Summary

Benefits of technology

[0055] An advantage of the invention is that it allows a user to enter bids on multiple, mutually exclusive items yet only receive the item corresponding to their highest ranked, winning bid. Yet another advantage of the invention is that it increases the probability of any one item receiving at least one bid, thus maximizing returns to sellers of such items.

[0056] The referenced system provides a highly advantageous manner to simultaneously auction mutually exclusive items. Mutually exclusive items may either be multiple items that physically cannot be possessed simultaneously or they may be more than one item that the user would not wish to simultaneously possess. This system allows the user to enter multiple, rank ordered bids that are sequentially processed. This allows the user to effectively bid on a large number of items while only receiving the item corresponding to their single, highest ranked, winning bid. This method increases the probability the user will successfully bid for one item; decreases the probability the user will be out bid at the last moment of the auction on all items of interest; significantly reduces the incentive for entering a slightly higher bid than the current winning bid at the last moment; and, significantly decreases the amount of auction involvement required by the user.

[0057] This method also benefits sellers by increasing the probability of receiving at least one bid for their item and increasing the expected winning bid amount. Consider the following case. Three bidders are bidding on three nearly identical, mutually exclusive items. All three bidders place their bids moments before the end of the auction. If all three bidders bid on the same item, two of the items receive no bids. If all three bidders place bids on all three items and rank order their preferences for each item, the bids can be processed such that each bidder receives at least one item. Assuming nearly equal preference for the three items by all three bidders, this new outcome is much preferred to the case where all three bidders bid on the same item. In the present example, all bidders receive nearly the same utility from the items they won and all sellers sold their items. This contrasts sharply with only one successful bidder and only one successful seller in the baseline example.

[0058] Thus, one significant benefit of the present invention lies in the fact that mutually exclusive items are included in the same auction or the items may be bid upon in successive auctions. In the latter case, the rank ordering of the items is constrained such that the auction closing date for each successively ranked item is the same or later than the auction closing date of the preceding ranked item.

Problems solved by technology

The standard auction practice may result in the maximization of the seller's revenue in some instances.

However, the standard auction practice is limited in some respects.

A user may not be able to utilize two mutually exclusive items.

However, they risk being the winning bidder on more than one item.

Also, if bidders limit themselves to a single bid, the probability no one will place a bid on any individual item increases, thus lowering the probability the seller will successfully sell their item.

Furthermore, the standard auction method does not allow the simultaneous maximization of two constraints.

However, standard auction practices do not allow the simultaneous maximization of both user preference and bid prices.

While U.S. Pat. No. 5,924,082 referenced above includes an option for providing ranking information, this option does not allow a bidder to prioritize bids in such system.

Moreover, the system described therein does not actually consummate a bid for an item, but rather merely identifies potential acceptable transactions between two parties.

Finally, while there is some prior art capability to perform bidding on multiple items of the same kind (in so-called Dutch auctions), the bidding process there is not optimized from the perspective of the seller, since the lowest winning bid price for the item is awarded to all the other winning bids, even if such latter bids are much higher.

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