Behavioral mechanism of financial decisions making in electronic auctions

Kobets Vitaliy
Candidate of Еconomic Sciences, Assistant Professor, Kherson State University. E-mail:kobetz@ukr.net

Cite this article:

Kobets V., (2018) Behavioral mechanism of financial decisions making in electronic auctions. Ed.: М.D. Baldzhy (ed.-in-ch.) and others [Systema pensiinoho zabezpechennia Ukrainy ta yevrointehratsiini protsesy; za red.: М. D. Baldzhy (gol. red.)], Scientific Bulletin of the Odessa National Economic University (ISSN 2313-4569), Odessa National Economics University, Odessa, No. 10(262), pp. 85-103.

Abstract

The behavioral factor in decision making has the similar important role as the economic one; thus, ignoring the subjective impact on the decision of economic agents alienates the economic model from real life, which greatly simplifies the economic analysis and reduces the adequacy of the findings, negatively affects the effectiveness of economic policy, forecasting and the quality of management decisions. In the paper, after the introduction of the behavioral factor and the comparison of the obtained results with theoretical models, our results contradict the traditional economic assumption about the effectiveness of existing auction trading formats. The paper analyzes behavioral factors and their influence on economic decision-making, compares various auction formats in terms of efficiency, develops a new adaptive auction format designed to reduce information asymmetry regarding the price of goods between traders to increase social welfare, an economic online experiment for comparing the results of adaptive auction with existing traditional formats. Approbation of the work carried out using the online platform for multi-round auction using IT tools of Google. During the experiment, it was found that the multi-round system increases the rationality of the decisions of the traders and therefore the number of profitable deals increases. At the same time, some traders, taking into account their behavioral characteristics, do not disclose their willingness to pay or cost per unit even under the threat of losing a profitable transaction. A minimally sufficient number of rounds was carried out to draw conclusions that were adequate to reality, which was confirmed by us with by the means of statistical criteria. It has been experimentally proven that in an adaptive dynamic modified double electronic auction, incentives are created to reveal of real types for most traders. A significant increase in the number of traders causes a slight increase in the number of rounds. Developed adaptive dynamic format of a double e-auction is close in efficiency to the perfect competition market and in terms of social welfare ahead of alternative auction formats, such as English and Dutch, in which the vast majority of traders do not reveal their types.

Keywords

electronic auction, social welfare, adaptive pricing mechanism, economic experiment, consumer surplus, producer surplus.

JEL classification: D110; D440

UD classification: 339.172+658.727

References

1. Лєншина Ю.М., Беляк Д.С. Реалізація послуги приватності у схемі інтернет-аукціону з використанням хамелеон-підпису. // Системи обробки інформації. – Х., 2011. – Вип. 3 (93). – С.126-129
2. Саймон Г. А. Раціональність як процес і продукт мислення. // THESIS. - 1993. - Вип. 3. - С. 16-38.
3. Саймон Г. А. Теорія прийняття рішень в економічній теорії і науці про поведінку. // Віхи економічної думки. Теорія фірми; [Під ред. В. Гальперіна]. - СПб.: Економічна школа.- 2000. - Т. 2. - С. 54-72
4. Вільямсон О. І. Поведінкові передумови сучасного економічного аналізу. // THESIS. - 1993. - Вип. 3. - С. 39-49.
5. Vitaliy Kobets, Valeria Yatsenko, Maksim Poltoratskiy. Dynamic Model of Double Electronic Vickrey Auction In: Batsakis, S. et al. (eds.) Proc. 10-th Int. Conf. ICTERI 2015, Lviv, Ukraine, May 14-16, 2015, CEUR-WS.org/Vol-1356, ISSN 1613-0073, P. 236-251, online CEUR-WS.org/Vol-1356/ICTERI-2015-CEUR-WS-Volume.pdf
6. Kobets V., Yatsenko V. What can economic experiments discover about evolutionary effectiveness of supermarket strategies? Marketing and Management of Innovations. 2018. Vol. 1. P. 152-168
7. Соценко Є.В., Кобець В.М. Адаптивний аукціон: експериментальний та емпіричний способи проведення. Інформаційні технології в економічних дослідженнях. 2016. Вип. 2. С. 113-122
8. Lapach S.N., Chubenko А.V., Babich P.N. Statistika v nauke i biznese. - Кyiv: Morion, 2001. - 408 p.