Optimal Auction Design for the Gradual Procurement of Strategic Service Provider Agents
Farzaneh Farhadi, Maria Chli, Nicholas R. Jennings

TL;DR
This paper introduces a novel auction mechanism for procuring services from strategic providers, balancing success probability and costs, with incentive compatibility and significant computational efficiency improvements.
Contribution
It presents a new auction design with a weighted threshold payment scheme and a low-complexity near-optimal auction for strategic service procurement.
Findings
Achieves up to 79% success probability
Reduces invocation costs by up to 11%
Improves performance by 59% over existing methods
Abstract
We consider an outsourcing problem where a software agent procures multiple services from providers with uncertain reliabilities to complete a computational task before a strict deadline. The service consumer requires a procurement strategy that achieves the optimal balance between success probability and invocation cost. However, the service providers are self-interested and may misrepresent their private cost information if it benefits them. For such settings, we design a novel procurement auction that provides the consumer with the highest possible revenue, while giving sufficient incentives to providers to tell the truth about their costs. This auction creates a contingent plan for gradual service procurement that suggests recruiting a new provider only when the success probability of the already hired providers drops below a time-dependent threshold. To make this auction incentive…
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Taxonomy
TopicsAuction Theory and Applications · Supply Chain and Inventory Management · Mobile Crowdsensing and Crowdsourcing
Methodstravel james
