"... In PAGE 8: ...f interest. The auctioneer has an incentive to in ate the price of a good. We can design auction mechanisms that are not vulnerable to this kind of direct price manipulation.5 We introduce a new auction property, untrusted-auctioneer compatible (UAC, Table2 ), for auctions that are not vulnerable to direct price manipulation by a strategic auctioneer. Direct price manipulation is strategic action by the auction- eer, or parties acting on behalf of the seller, that is risk-free (while undetected) and can only increase revenue.... In PAGE 9: ...is reason to believe that the auctioneer might pro t from the nal sale price of the good. An auction that is also seller incentive compatible (IC S, Table2 ) is secure from indirect price manipulation. Indirect price manipulation is strategic action by the auctioneer, or parties acting on behalf of the seller, that includes some risk of decreasing revenue, for example when information about the preferences and strategies of buyers is not fully accurate.... In PAGE 11: ... This is preferable to a descending price auction where the auctioneer must lower the price of a good at a rate that is appropriate to the bounded rationality of the bidding agents, in order to avoid missing a price that an agent would accept given enough time to reason about the true value of its reservation price. Furthermore, when we consider the trust properties of auctions, we see that the descending second price auction is susceptible to manipulation by an un- trusted auctioneer in the same way as the Vickrey auction, while the rst price ascending auction is untrusted-auctioneer compatible because the winning agent pays the price that it bid (UAC, Table2 ). Both progressive auctions are however susceptible to indirect price manipulation (ICS, Table 2).... In PAGE 11: ... Furthermore, when we consider the trust properties of auctions, we see that the descending second price auction is susceptible to manipulation by an un- trusted auctioneer in the same way as the Vickrey auction, while the rst price ascending auction is untrusted-auctioneer compatible because the winning agent pays the price that it bid (UAC, Table 2). Both progressive auctions are however susceptible to indirect price manipulation (ICS, Table2 ). It is interesting to note that it is impossible for an auction mechanism to be both buyer and seller in- centive compatible (compare Table 1 and Table 2) [22], and that we must accept indirect price manipulation in return for simple optimal bidding strategies.... In PAGE 11: ... Both progressive auctions are however susceptible to indirect price manipulation (ICS, Table 2). It is interesting to note that it is impossible for an auction mechanism to be both buyer and seller in- centive compatible (compare Table 1 and Table2 ) [22], and that we must accept indirect price manipulation in return for simple optimal bidding strategies. We conclude that the most suitable auction for agent mediated on-line auc- tions, when the space of possible goods is large and diverse, and users do not know their reservation prices for all goods, is the rst price ascending auction.... ..."

"... In PAGE 6: ...optimization problem. We summarize the cost and trust properties over six di erent auction mech- anisms in Table1 and Table 2.3 We will introduce two new auction properties: bounded-rational compatible and untrusted-auctioneer compatible.... In PAGE 6: ... The premise of our work is that the cost of the rst cognitive process, that of determining a reservation price for a new, previously unvalued, good is nontrivial, and will often dominate any other costs to participation in an agent mediated on-line auction. In an auction that is buyer incentive compatible (IC B, Table1 ) the dominant strategy for a buyer is to bid her true value for a good [9]. It is not necessary for a buyer to incur the cognitive cost of strategic counterspeculation that can be useful in some auction mechanisms.... In PAGE 7: ... Di erent auction structures require vastly di erent expected e ort by buyers to determine a value for a good that is being auctioned. We introduce a new auc- tion property, bounded-rational compatible ( BRC, Table1 ). A bounded-rational compatible auction, such as the English auction, will often allow a bidding agent to follow an optimal bidding strategy with only approximate information on the value of a good.... In PAGE 8: ...price that is below the buyer apos;s true value. Finally, we also consider whether an auction mechanism has low communica- tion costs (COMM L, Table1 ). The communication cost of an auction mechanism depends on the size of a single bid, and the expected number of auction rounds.... In PAGE 10: ... This allows buyers to defray, and if possible avoid, the cogni- tive cost of placing an accurate valuation on a good. The auction mechanisms that we have considered that are both buyer incen- tive compatible and bounded-rational compatible are the rst price ascending auction and the second price descending auction (see Table1 ). We rule out the second price sealed bid (Vickrey) auction because it is not bounded-rational com- patible and we want to avoid the high cognitive cost of computing the reservation price for every auction.... In PAGE 11: ... Both progressive auctions are however susceptible to indirect price manipulation (ICS, Table 2). It is interesting to note that it is impossible for an auction mechanism to be both buyer and seller in- centive compatible (compare Table1 and Table 2) [22], and that we must accept indirect price manipulation in return for simple optimal bidding strategies. We conclude that the most suitable auction for agent mediated on-line auc- tions, when the space of possible goods is large and diverse, and users do not know their reservation prices for all goods, is the rst price ascending auction.... ..."

"... In PAGE 7: ... In some auctions, a robust solution may not exist. Table3 shows the percentage of auctions that sup- port robust solutions for the arbitrary-npv and regions-npv distributions. It is clear that finding robust solutions for the former distribution is particularly difficult for auctions with 250 and 500 bids when revenue constraints are 90% of optimum.... ..."

"... In PAGE 8: ... In some auctions, a robust so- lution may not exist. Table3 shows the percentage of auctions that support robust solutions for the arbitrary-npv and regions -npv distributions. It is clear that finding robust solutions for the former distribution is particularly difficult for auctions with 250 and 500 bids when revenue constraints are 90% of optimum.... ..."

"... In PAGE 4: ... Seller incentive-compatibility implies that a seller cannot bene t from manipulating the price of any item she is selling, either by the use of a shill (a third party) or by placing a bid herself. We present these properties over a space of auction types in Table1 . The incentive-compatibility properties are standard (see McAfee and McMillan (1987), for example).... In PAGE 6: ... Traditional considerations of the cognitive costs of auctions include the cost of strategic bidding in a non-incentive compatible auction. Clearly, incentive- compatible auctions require less computation by bidders than auctions which are not incentive-compatible, and thus are preferable (I CB, Table1 ). Estimating how much other bidders are willing to pay (in order to bid slightly more than what one thinks the second highest bidder will bid) is not easy, although in agent-mediated auctions this cost can be transferred from a human participant to its bidding agent, and is less important than in traditional auctions.... In PAGE 7: ... An institutional solution to untrusted auctioneers in on-line Vickrey auctions is to provide trust-certi ed third parties that operate the auctions. The English auction is also susceptible to seller manipulation, but strategic action is not risk-free, and requires the help of a third-party, known as a shill (I CS, Table1... In PAGE 8: ... The auction should be buyer- incentive-compatible (I CB) to make strategic bidding unnecessary, and reservation- price-not-necessary (nRP) to enable progressive reasoning. We can see from Table1 that the two auction formats with these properties (ignoring the redun- dant ascending second-price auction) are the ascending rst-price and descend- ing second-price auctions. Even with a trusted auctioneer, the Vickrey auction is not suitable because we wish to avoid the high cognitive cost of computing the reservation price for every auction.... ..."

"... In PAGE 4: ... Seller incentive-compatibility implies that a seller cannot bene t from manipulating the price of any item she is selling, either by the use of a shill (a third party) or by placing a bid herself. We present these properties over a space of auction types in Table1 . The incentive-compatibility properties are standard (see McAfee and McMillan (1987), for example).... In PAGE 6: ... Traditional considerations of the cognitive costs of auctions include the cost of strategic bidding in a non-incentive compatible auction. Clearly, incentive- compatible auctions require less computation by bidders than auctions which are not incentive-compatible, and thus are preferable (I CB, Table1 ). Estimating how much other bidders are willing to pay (in order to bid slightly more than what one thinks the second highest bidder will bid) is not easy, although in agent-mediated auctions this cost can be transferred from a human participant to its bidding agent, and is less important than in traditional auctions.... In PAGE 7: ... An institutional solution to untrusted auctioneers in on-line Vickrey auctions is to provide trust-certi ed third parties that operate the auctions. The English auction is also susceptible to seller manipulation, but strategic action is not risk-free, and requires the help of a third-party, known as a shill (I CS, Table1... In PAGE 8: ... The auction should be buyer- incentive-compatible (I CB) to make strategic bidding unnecessary, and reservation- price-not-necessary (nRP) to enable progressive reasoning. We can see from Table1 that the two auction formats with these properties (ignoring the redun- dant ascending second-price auction) are the ascending rst-price and descend- ing second-price auctions. Even with a trusted auctioneer, the Vickrey auction is not suitable because we wish to avoid the high cognitive cost of computing the reservation price for every auction.... ..."

"... In PAGE 5: ... Conclusions and Future Work Given the results, we can draw a few conclusions: 1) the weighting functions do not affect significantly the quality of the PCP; 2) discrete and gaussian weightings are not robust; 3) there is no absolute winner . Nevertheless, Table3 suggests the use of some functions, depending on the interest of the developer. If he wants a simple solution, no ... ..."