Transcript Auctions in SCM

Auctions in SCM
•Auction descriptions
•Decision-theoretic approach
•Collusive and no-collusive gametheoretic approach
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Trading Agent Competition: Supply
Chain Management game
• 6 software agents compete to run
profitable PC assembly business for 220
days
– Bidding for components from 8 suppliers
– Bidding for orders from 100’s of customers
(simultaneously)
– Managing production & delivery planning
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Auction Descriptions
•Cheat-sheets
•Agent valuations
•Analogs
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Supplier auction
Periodic-clear, multi-unit, bizzaroprice auction
• Bid structure: component type, quantity, date
and reserve price
• Information: 20-day summary, offer price, date &
quantity
• Clearing rules: ...
• The good: Offers of components of type t,
satisfying reserve price, satisfying one or both of
date and quantity
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Supplier pricing
•
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i = days in advance
d = date
i*Cacd = naïve estimate of supply
Cavl' = supply - demand (not counting RFQs from
agents with less reputation) up to date d+i
• delta = 0.5
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Reputation
• Reputation is ordered : offered ratio.
• Includes a prior of 2000 ordered & offered
+ 100 per day.
• Renormalized on the range [0,0.9] for IMD
& Pintel, [0,0.45] for all others, but limited
to 1.
• For each RFQ, offered = max (smallest
offer, ordered, 0.2*requested )
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Customer auction
Simultaneous/sequential, reverse,
single-unit, 1st-price auction
• The good (fully disclosed): Right to sell 1-20 computers
of specified type for bid price, or be penalized 5-15% of
the reserve price every day late to a maximum of 5 days
(after which the order is cancelled)
• Bid structure: price, date and quantity
• Clearing rules: Lowest price that satisfies date, quantity
& reserve price
• Information: Whether or not you win, max and min
winning bid over auctions for that type of PC, 20 day
summary
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20-day summary
• Suppliers
– Total ordered/shipped for each class (eg,
CPU)
– Mean production capacity for each class
– Mean price for each component
• Customers
– Total requested/ordered for each SKU
– Mean price for each SKU
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Valuation and exposure definitions
• Super-additive valuation: The value of a
set of goods is greater than the sum of the
values of those goods
• Sub-additive valuation: The value of a set
of goods is less than the sum of the values
of those goods
• Exposure: The risk of winning some suboptimal set of goods
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Exposure in SCM
• In isolation, every good has negative
value:
– Components cost money to store
– Customers charge for missed shipments
• Super-additive: Only "matched sets"
(components and orders) can turn profit
• Sub-additive: Too many matched sets will
overwhelm production capacity and cause
loss
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Analogs
• Compare supplier auctions and 2nd price
– Payment independent of reserve price
– Reserve price is a bound on payment
– Probability of winning increases monotonically
with reserve price
– Therefore, Dominant Strategy Truthful? (At
least for the reserve price)
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Decision theoretic approach to
customers
• Customer side seems to come down to
conditional distribution modeling
– P ( winning | bid price , state)
– State includes auction parameters and known
facts about the world (eg, recent prices, 20day reports)
• Then bid to maximize valuation
– Naïve P()=1 approach
– Expectation approach
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Decision theoretic approach to
suppliers
• Reserve price is DS Truthful?
• Large quantities bids can be risky to
reputation
• Effect of local price fluctuations is
exaggerated
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Non-Collusive Approaches
•Disrupting markets
•Disrupting agents
•Risk-attitudes
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Disrupting markets
• Increasing demand in supplier markets
– Limited scope: doesn’t affect customer
reserve price (or late penalty) or storage costs
• High- or low-balling customer auctions
(exploiting other agents exposure risks)
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Disrupting agents algorithms
• Crashing unreliable agents (making the
impossible happen)
• Preventing convergence (adding noise to
the available information)
• Exploiting simplistic models (oscillating
strategies)
• What about between-game learning
(human and machine)?
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Reconsidering reputation
• Agents can compute their own reputations
exactly and can deliberately “manage”
them
• Reputation has monotonic, but “relative”
value (best can’t improve, worst can’t get
worse)
• An opportunity for active learning?
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Externalities & Risk-attitudes
• Outcome space can be profitability or it
can be the final (relative) rankings
– Agent has negative externalities against
another’s benefit
• Utility from ranking
– Implies actual value of money is a sum of step
functions
– Observation of rankings will be very noisy
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Collusive Approaches
•FCC Spectrum Auction
–Applications to TAC
•Set-your-hair-on-fire Collusion
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FCC spectrum auction
Simultaneous, single-good, English
auctions
• The good: Exclusive rights to broadcast on
a given frequency range in a given US city
• Bid structure: “Real-value” jump bids are
allowed
• Information rules: Bidders are not
anonymous
• Clearing rules: Auctions all clear at once
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How to collude in the FCC auction
• Agents decide on a distribution "outside"
of the mechanism
• Defection is punished by threat or
retaliation bids on multiple goods held by
the defector
• Communication through the identity of the
bidder and possibly the timing or value of
the bid (nothing else needed)
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Cost/benefit of collusion
• Cost: “Freedom” to bid on any auction you
wish
• Benefit: “Protection” from the full costs of
market competition
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Bad news: prisoner’s dilemma
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Outcome of collusion
• Robust: cartel was a small subset of actual
bidders (6 out of 153)
• Profitable: member of the cartel paid
significantly less ($2.50/person vs.
$4.34/person) for more (476 out of 1479)
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Differences from SCM
• Auctions are sealed bid
• Winner and winning bid aren't announced
• Auctions close periodically
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Communication options for SCM
• Outside channels: "In poor taste"
• Supplier auctions: Difficult and expensive
• Customer auctions: The min-bid for a type
of PC
– Cost to send
– Very limited bandwidth
– Shared bandwidth
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Enforceability in SCM
• Defector-detection is difficult because of
anonymity and sealed-bid
– Probabilistic inference?
• Is enforcement necessary?
– Not if the cartel all represent one entity
– Multiple agents can advance and cartels
would benefit from advancing collectively
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Set-your-hair-on-fire collusion
• Ignoring cost, an agent can disrupt
supplier and customer markets indefinitely
• Agents that can anticipate (or request)
disruptions have a significant advantage
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What if Collusion is illegal?
• Set-their-hair-on-fire collusion!
– Our martyr agent tries to help another team
instead
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Thanks!
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