Abstract:
The present invention provides a smooth ending system for an auction on the Internet. The system randomly selects an end time for the auction by picking an auction duration from a probability distribution, so that bidders have no preferences over the time of bidding. At any given time, assuming that the auction is still in process, there is a fixed probability, independent of the time that has elapsed since the beginning of the auction, that the auction will end within the next time unit.

Description:
BACKGROUND OF THE INVENTION 
     1. Field of Invention 
     The present invention relates generally to the field of conducting on-line auctions over a computer or communication network, such as the Internet. More particularly, the present invention relates to a system for randomly varying the time period of an auction on the Internet. 
     2. Discussion of Prior Art 
     Traditionally, auctions have provided a desirable and exciting marketplace for the buying and selling of products. Typically with auctions, there is the possibility of an individual participating in the auction obtaining a product at a very competitive price. At the same time, the seller always has the possibility of obtaining higher than expected value. Since the auction entails multiple people bidding for a product, the goal of the seller and auctioneer is to increase the probability of obtaining the highest possible bid. 
     Drawbacks to auctions, however, include restrictions on participation based on an individual being required to attend the auction in person and actively place a bid on a product of interest. Secondly, participants are required to have enough funds at the time they attend the auction. These restrictions may hold down the final price of an item for sale. 
     Recent innovations such as high speed computers, e-mail and the Internet have made it possible to conduct on-line auctions where individual bidders place their bids in real-time from a remote computer location via the Internet before or during a bidding section. Details of products to be auctioned are posted on an auction site computer and are available to bidders and sellers via the Internet. Several on-line auctions such as Housing Urban Development (HUD®), Ebay® and On-sale® allow bidders to register and submit bids through the Internet. Items for sale and bid information are displayed on the bidders remotely located terminals. Bid information may include a description of items for auction, last bid, date auction ends, date auction started, sellers information, current number of bids, etc. Typically the auction runs for a period of several days or weeks before allocating the item for auction to the highest bidder. 
     Most auctions are announced with an exact end of auction time. Sealed bid auctions typically have a firm deadline so that the winner(s) is (are) selected from bids that were received before the predetermined deadline. In other auctions, the bidding goes on until a known end time and the winner(s) is (are) determined according to pre-fixed rules. While in traditional auctions the predetermined end time may not present any particular problem, on the Internet this feature introduces undesirable side effects. Firstly, due to very heavy traffic close to the end of an auction with multiple terms, bidders may not be able to access the current bid amount, and may not be able to revise their bids accordingly. Secondly, bidders sometimes wait until the last moment and then enter a bid that is sufficient for winning. Bidders prefer to wait, fearing that competitors may raise the bid amount even higher or sometimes they forget to return to, the auction. As a result, sellers often do not realize the optimum selling price for their items. 
     The prior art in this art area is exemplified by the following-patent which describes a system and method of conducting a multi-person interactive on-line auction which terminates the auction from further bidding and notifies the winning bidders and losers as to the auction outcome that is based on elapsed time since the start of the auction and bidding history of the auction. 
     U.S. Pat. No. 5,835,896, issued to Fisher at al., discloses a method and system for processing and transmitting electronic auction information. The system allows a group of bidders to interactively place bids over the computer or communication network. Based upon a predetermined time, a period of no bidding activity or when a desired sales volume is reached, the system closes the auction from further bidding and notifies the winning bidders or losers of the auction outcome. However, this patent makes no mention of the system selecting a random auction end time. The limitations identified above may result in a final price that is lower than what the seller could have obtained otherwise. 
     The present invention overcomes the drawbacks of the prior art by providing a method and system for selecting a random auction end-time. The system allows a seller to set a desired end-of-auction time, and based on such setting, the system generates a random end time for the auction by picking an auction duration from a probability distribution, so that bidders never have any preference over the time of bidding. 
     SUMMARY OF THE INVENTION 
     The present invention provides a smooth ending system for an auction on the Internet. Furthermore, the system randomly selects an end time for the auction by picking an auction duration from a probability distribution, so that bidders have no preferences over the time of bidding. At any given time, assuming that the auction is still in process, there is a fixed probability, independent of the time that has elapsed since the beginning of the auction, that the auction will end within the next time unit. Furthermore, the system prompts the seller to indicate or set a desired expected duration d of the auction. The system then proceeds to picking a pseudo random number r 0&lt;r&lt;m where m&gt;&gt;1. The system calculates D according to the formula D=−d In (1−r/m). Auction begins at time t and finally the system determines end time of auction according to t+D. 
    
    
     BRIEF DESCRIPTION OF THE DRAWINGS 
     FIG. 1 illustrates the general environment for the auction system. 
     FIGS. 2 a - 2   b  are prints/screen shots of a typical on-line auction. 
     FIG. 3 illustrates a flow chart depicting steps for randomly selecting an auction end-time. 
    
    
     DESCRIPTION OF THE PREFERRED EMBODIMENTS 
     While this invention is illustrated and described in a preferred embodiment, the system may be produced in many different configurations, forms and materials. There is depicted in the drawings, and will herein be described in detail, a preferred embodiment of the invention, with the understanding that the present disclosure is to be considered as a exemplification of the principles of the invention and the associated functional specifications of the materials for its construction and is not intended to limit the invention to the embodiment illustrated. Those skilled in the art will envision many other possible variations within the scope of the present invention. 
     FIG. 1 illustrates the general environment for the present invention. An on-line auction system which allows a plurality of bidders  102 - 104  to access a plurality of auction sites  112 - 122  and participate in an auction during a bidding session from a remote location via communication lines. Similarly, a plurality of sellers  106 - 108  access auctioneer-sites  112 ,  122  over the a computer network such as the Internet  110 . Auctioneer site  112  includes computer server  114  connected via communication lines to the remote terminals of both the bidders and the sellers. Continuing with auction site  112 , is database  116  which contains and receives information such as items for bid, item description, item identification number, bid records, price ranges, sellers information, etc. Auction site  112  further includes auction manager  118  which run the auction. Running the auction includes, but is not limited to, the following functions: accepting bids, comparing bids, applying auction rules, determining seller identities, determining ends times, bid pooling etc. Included also in auction site  112  is input/output device  120  that handles all communication between bidders  102 - 104 , sellers  106 - 108  and auctioneer site  112 . An example of an Internet auctioning system is described below in FIGS. 2 a - 2   b.    
     FIG. 2 a  shows a screen print of a typical on-line auctioning system. The screen print illustrates an auction system for auctioning an item for bid. Shown in this print is an announcement of the exact end time  202  of the auction. Other features that may be of interest are the lowest bid that will be accepted, first bid, number of bids, auction location, auction start time, predetermined end time and the remaining time left. Furthermore, FIG. 2 a  includes a hypertext link entitled bid history  204  and, upon clicking such link, the system takes a user to the print shown in FIG. 2 b . FIG. 2 b  therefore, illustrates more detailed information pertinent to the bid history for the item for bid. The screen print in FIG. 2 b  shows the date and time the auction ends  206  as “01/22/00,22:17:09 PST” indicating to the bidder the remaining left time that may therefore encourage the bidder to wait until the last moment before entering a bid that is sufficient for winning. 
     Referring to FIG. 3, a flow diagram illustrates steps of the present invention for randomly selecting an end time for an auction on the Internet. According to this system, sellers have the option of setting an end-of-auction time at random by letting the system pick for them an auction duration from a probability distribution so that bidders never have any preferences over the time of bidding. The system indicates to a seller, who will like to use such an option, to set desired expected duration d in step  302  of the auction. The system then picks a pseudo-random number r in step  304  where 0&lt;r&lt;m and m&gt;&gt;1. In step  306 , the system picks a random number D from an exponential distribution with expectation d indicated by the seller in step  302 , where D is calculated according to the formula D=−d In (1−r/m). A selected auction begins at time t as in step  308  and the system sets the end time of the auction to t+D. Given the auction has not ended, the end-time of the auction can be determined or re-determined during the auction, and participants do not get any further knowledge about the likelihood of it ending within the next time unit. 
     The end of the auction time is kept secret from the bidders. Revealing the start of auction time t to the bidders does not give the participants any more information about the actual end of the auction time. By revealing the expected duration d, the seller indicates to the participants how likely it is for the auction to end soon. 
     An alternative embodiment is to restart the auction automatically with a new D in case the number of bids received by the previous end-of-auction time does not exceed a predetermined minimum. The minimum can be left for the seller to choose, but I do not see why we need to limit the scope of the invention in this way. The system therefore, allows the seller to post a relatively small d, so that the interested bidders are urged to act quickly, but the seller reserves the right to reinstate the auction if the number of bids received is below the predetermined value. 
     The above desired steps of selecting a random time period for an auction and its described functional elements are implemented in various computing environments. For example, the present invention may be implemented on a conventional IBM PC or equivalent, multi-nodal system (e.g. LAN) or networking system (e.g. Internet, WWW). All programming, and data related thereto are stored in computer memory, static or dynamic, and may be retrieved by the user in any of: conventional computer storage, display (i.e. CRT) and/or hardcopy (i.e. printed) formats. The programming of the present invention may be implemented by one of ordinary skills in computer programming. 
     CONCLUSION 
     A system and method has been shown in the above embodiments for the effective implementation of randomly selecting an end time for auction on the Internet. While various preferred embodiments have been shown and described, it will be understood that there is no intent to limit the invention by such disclosure, but rather, it is intended to cover all modifications and alternate constructions falling within the spirit and scope of the invention and as further defined in the appended claims. For example, the present invention should not be limited by software/program, computing environment or any specific computing hardware.