German Auction

Background

GERMAN auction is resolving a problem that all customers have that use DUTCH auction with more positions:

• Currently positions close and open sequentially to the next full minute, meaning that Dutch auctions with multiple positions tend to take very long
• With a longer duration, the tension is partially lost, resulting in lower interest of the bidders
• Bidders have more time to prepare tactical games, showing little interest in the first positions while waiting for the future ones to open. Poor results for the positions first in sequence can be the result.

Consequently, these are the features of the German auction:

• All positions will run in parallel.
• All positions share the same time steps, i.e. they start at the same time.
• If a position receives a bid, it closes, but the other positions remain open, until receiving a bid for itself or reaching the reserve price (upon reaching they close).
• In case a supplier confirms a bid for all positions, all positions close at once and the entire auction is ended.
• In this way, a German auction is a combination of a Dutch (bid direction = Up; Automatic bidding = Yes) and English auction (all positions run in parallel).
• For supplier, there is less time for decisions, the pressure increases, a better preparation / training is advisable.

Configuration

These settings are relevant in the setup of the German auction:

Auction settings / Auction definition

• Type = German
• Direction = Up. Please note that the bid direction = Down cannot be used. It is producing unpredictable results.
• Settings level: If = Position, bid steps and reserve price can be configured on position level on the page Auction structure. If = Auction, the bid step and reserve price are entered on this page.
• Time step. The setting applies to all positions. It is advisible to use short steps.

Auction structure / Positions

• Bid step and Reserve price need to be stated for each position, if position level is selected on Auction definition.
• Bid steps per position always refer to all bid steps of this position during a German auction. Unlike Dutch auctions, where the bid step can be configured for each sequence, the German auction assumes a linear progress of the bid steps.
• Time steps cannot be modified on this page.

Auction settings / Bid box layout

• There are 2 new fields available in the header section
  • # Positions in bidding
  • # Positions closed

Status Bidding

A position closes under one of the following conditions:

• A bidder has confirmed the displayed price. The bidder whose bid arrives first in the server, is the winner.
• The reserve price has been reached. The condition is met when the next bid step - the one that exceeds the defined threshold value - has passed. Example:
  • An auction position has a reserve price of 30.001 EUR defined.
  • The last bid step was 30.000 EUR. No bidder accepted.
  • The next bid step is 30.500 EUR (since the increment is defined with 500 EUR).
  • After 30.500 EUR is displayed and no bidder accepted, the position is closed and "No winner" is displayed.

To avoid such situations, the configuration of the reserve prices should always use straight numbers, that are an (integer) multiple of the bid increment.