Interesting Auction Tech

Worked on some auction tech way back when, so this interested me.  Not to say I fully understand it, but like to see new and differ ways of valuing  things.  

Through the looking glass: A cross-chain sealed-bid auction using Aztec Connect,    Michael Zhu

AUCTION DESIGN, TABLE OF CONTENTS

How it works, Hiding bids via “splitting”

Aztec Connect for anonymous bidding

InputValue

How it compares, Gas costs, User experience, Privacy

Editor’s note: This piece is part of our ongoing series on all things auctions for web3. Part 1 was an overview of technical challenges (and opportunities) specific to designing on-chain auctions. Part 2 was a piece on clearing the market and avoiding gas wars. Part 3 and Part 4 explore how auction theory translates into practice by introducing two implementations of sealed-bid auctions. 

Over the course of this series, we’ve explored different strategies for bridging the gap between auction theory and what can be built on-chain, each with its unique nuances. In particular, we’ve focused on implementing sealed-bid, second-price (Vickrey) auctions, which have been used for decades in sales of art, timber, and ad space. But we rarely see them implemented trustlessly using smart contracts, in part due to the difficulty of implementing private bids. The transparent nature of public blockchains can prevent dishonest intermediaries from censoring bids or manipulating auction results; but they also impose challenges on developers, who must find novel solutions for protecting their users’ privacy. 

In our previous auction implementations, we’ve used two approaches to keeping on-chain bids private: The first (OverCollateralizedAuction) conceals bid values using overcollateralization (where bidders lock up more collateral than required by the bid), protecting privacy at the expense of capital efficiency. This led us to our second design (SneakyAuction), which uses the CREATE2 opcode to camouflage bids among other transfers on the blockchain. But empirical analysis showed that this approach would not be effective at hiding very large bids that deviate from amounts typically transacted on Ethereum. 

In this post, we return with a novel cross-chain approach (called AztecConnectAuction) that can provide privacy to bids of any size, without requiring extra collateral. Relying on multiple blockchains achieves functionality that wouldn’t be possible on any single chain alone, and provides a different set of benefits and tradeoffs for developers to consider when implementing their own protocols. In our case, we use Aztec Connect to leverage the anonymity of Aztec’s ZK rollup, while retaining the benefits of Ethereum L1 settlement. 

We’ve added the implementation to our Auction Zoo repository on GitHub, alongside our previous auction implementations. We hope you’ll build on these, share your ideas, and send us your feedback.

How it works

First a quick refresher on the Vickrey auction: Bidders submit private bids (traditionally for a single item) to the auctioneer in sealed envelopes. The highest bidder wins, but pays the second-highest bid. To translate these characteristics on-chain, our new auction follows the same blueprint as before: Bids are collateralized and committed to during the “bidding phase”, in such a way that doesn’t reveal their precise values until they are revealed in the subsequent “reveal phase”. Once the reveal phase is over, the auction can be ended and the winning bidder pays the seller in the amount of the second-highest bid (the Vickrey payment rule). Our auction implementations differ in how they keep bids hidden during the bidding phase — this time, we will use a mechanism that is capital efficient even for large bids. 

Hiding bids via “splitting”

In OverCollateralizedAuction, privacy relied on overcollateralization to hide the exact bid value. In SneakyAuction, we were able to achieve bid privacy by using the CREATE2 opcode to hide the intent of a bid transaction — the value of the transaction is publicly visible, but the transaction is indistinguishable from a normal ETH transfer.

An alternative approach is to obfuscate the value of a bid by splitting it into multiple, unlinkable transactions. Imagine an auctioneer receives three checks for $100, $200, and $300, each signed with invisible ink. All three could have been signed by the same bidder, tendering a bid for $600. Or, they could be three separate bids, signed by three respective bidders. Or, there might be two bidders, one of whom has split their bid into two checks. Even if the check amounts are public, the underlying bid values are hidden until the signatures are revealed.   .... ' 

NFT Mint Sweet Spots

Read this with some interest, but not with full understanding .... suggest you look at the link for more, including explanatory charts.   I too am always looking for new ways to make a living.  Could this be linked with auction optimization?

Andreessen Horowitz  A16z

The NFT Mint ‘Sweet Spot’: Data on Early Decisions

by Daren Matsuoka ( cryptocurrencies & blockchains  a16z crypto  code releases  NFTs  what the smartest people do on the weekends...)

NFTs offer creators a new way to earn a living online. The technology, which has several applications, allows creators to appeal directly to fans for patronage — without having to rely only on extractive, ad-based, centralized platforms as intermediaries.

But it’s important that creators take special care when setting the initial parameters for their NFT mints (the process that puts their work on a blockchain, allowing it to be sold and more). This is because these early decisions can affect the viability, and vitality, of their projects. 

To share some early data that may offer creators some insights across projects besides their own, I analyzed minting data from the top 150 NFT collections on OpenSea, the popular NFT marketplace [disclosure: an a16z crypto portfolio company]. Here are some benchmarks and quick takeaways from that data, based on a new dashboard that I created on Dune Analytics:

NFT mint price

Choosing an “ideal” NFT mint price is key. A higher initial price means more revenue gets generated up front, assuming there is enough demand. But a higher initial price will also dampen the potential returns for a creator’s earliest backers, which could impact the volume of secondary sales. (Creators being able to easily receive royalties from secondary sales is one of the benefits of NFTs.)

According to the data set, NFT collections with mint prices set greater than 0.25 ETH have rarely achieved returns greater than 10x. Only two collections succeeded in doing so: Azuki Zen, which had an average mint price of 0.94 ETH; and Invisible Friends, which was sold at a fixed price of 0.25 ETH. (At the time of writing, their floor prices were respectively 6.4 ETH and 19.5 ETH.)  .... '

Designing Optimal Auctions Through DeepLearning

Long time involved in auction protocols.  So this interested me.  Not quite sure how it would work in contexts, but intriguing.  Technical.

Optimal Auctions Through Deep Learning  By Paul Dütting, Zhe Feng, Harikrishna Narasimhan, David C. Parkes, Sai S. Ravindranath

Communications of the ACM, August 2021, Vol. 64 No. 8, Pages 109-116  10.1145/3470442

Designing an incentive compatible auction that maximizes expected revenue is an intricate task. The single-item case was resolved in a seminal piece of work by Myerson in 1981. Even after 30–40 years of intense research, the problem remains unsolved for settings with two or more items. We overview recent research results that show how tools from deep learning are shaping up to become a powerful tool for the automated design of near-optimal auctions. In this approach, an auction is modeled as a multilayer neural network, with optimal auction design framed as a constrained learning problem that can be addressed with standard machine learning pipelines. Through this approach, it is possible to recover to a high degree of accuracy essentially all known analytically derived solutions for multi-item settings and obtain novel mechanisms for settings in which the optimal mechanism is unknown.  ... " 

On Auction Theory

 A favorite topic we used for supply chain decision modeling.   Nicely overviewed here in Kellogg.  Below a good reminder to me of its outline , and there follows a good overview.   Well worth understanding. Reviewing now:  

What Is “Auction Theory,” and What Kinds of Questions Can It Answer?

The recent Nobel put the field in the spotlight. An economist explains how it works, using his own research as a guide.

Auction theory—which studies different auction formats and attempts to predict how people will behave in them—is having its moment in the spotlight.

The attention stems from the recent awarding of the Nobel in economics to two pioneers of auction theory research, Paul Milgrom and Robert Wilson, both at Stanford University. (Milgrom is a former Kellogg School professor.) Their work is both theoretical and practical: in the 1990s the Federal Communications Commission used their research to create a new way of auctioning off radio frequencies, resulting in billions of dollars in sales.

Kellogg’s Joshua Mollner started collaborating with Milgrom while Mollner was a Ph.D. student at Stanford. The two have a new paper out on auction theory. Kellogg Insight talked with Mollner, an associate professor of managerial economics and decision sciences, about the research and the Nobel announcement.  ...  '

Cristie's to Sell AI Art

Consulted for the Auction industry in past years. Can such art also be profitable for sale?

Is the Art Market Ready to Embrace Work Made by Artificial Intelligence? Christie’s Will Test the Waters This Fall

The auction house is selling an AI-produced work of art for the first time this fall.

By Naomi Rea

Southeby's Suggesting Taste with AI

Again, the use of detected pattern to customize, personalize.   With a replacement of some kinds of expertise.  Have worked with auction companies and the idea is a useful one.  Could also see this setting the table with monetizing by predicting transactions and linking to key participants based on previous activity.   Many possibilities.

Can AI have good taste? Auction giant Sotheby’s is counting on it in FastCompany

Sotheby’s acquired startup Thread Genius, whose machine learning tech can discern clients’ artistic and style leanings–and suggest customized purchases.  ... " 

Level K thinking in Auctions and Assistants

How we also model interaction in any kind of interaction.   Adversarial or Collaborative

Level-K Thinking in Auctions  (Page 11)  By David Banks, Duke University ...

From Talk notes.

" ... A fourth solution concept is level-k thinking. If Daphne is a level-0 thinker, she bids non-strategically. If she is a level-1 thinker, she believes Apollo is a level-0 thinker, and makes her best response given her subjective assessment of the probabilities. If she is a level-2 thinker, she believes Apollo is a level-1 thinker, and so forth.

The “I think that you think that I think ...” reasoning becomes intricate. (Recall Vizzini’s analysis of the iocaine powder in The Princess Bride). An example will be more clear: Suppose Daphne is a level-2 thinker. She believes Apollo is a level-1 thinker who thus believes that she is non-strategic....   "

From talk described here.

Update: Adversarial Risk Analysis Talk

 Talk given this week by Dr David Banks of Duke University and sponsored by Yichen Qin,  Assistant Professor, Department of Operations, Business Analytics, and Information Systems,  Lindner College of Business, University of Cincinnati,  on April 6, 2018

Adversarial Risk Analysis Talk, full announcement.

Speaker: Dr. David Banks, Duke University

Title: Adversarial Risk Analysis

Abstract: Adversarial Risk Analysis (ARA) is a Bayesian alternative to classical game theory. Rooted in decision theory, one builds a model for the decision-making of one's opponent, placing subjective distributions over all unknown quantities. Then one chooses the action that maximizes expected utility. This approach aligns with some perspectives in modern behavioral economics, and enables principled analysis of novel problems, such as a multiparty auction in which there is no common knowledge and different bidders have different opinion about each other.   .... " 

Here are the slides from the talk  (Technical)

Good talk. In particular because it dealt with  how people work in interactions.   Either versus nature, or versus other humans, here in some sort of competition.  The most common game example used was the Auction.  In the cases described these were adversarial.  Under the structure of this  'game' to win the auction.   Humans in any interaction build a model of who they are interacting with.   The methods proposed construct numerical methods to define the value of alternative strategies.

 But it immediately came to  mind that these methods don't need to be adversarial.   When people converse, or ask for help from an adviser  (Human or machine).  they are looking to maximize the value of the interaction.   In a chatbot, for example a person wants to solve a problem, the chatbot has defined knowledge.  How should the interaction proceed?   How should these advisory approaches be strategically designed?  Under constraints and costs?   How do we rate Assistants in an approach to provide value?  Whats the structure of that game?    Examining.

Sotheby's International Realty Does VR

Did work in the auction space, so I follow Sotheby's,   On the face of this VR App looks impressive.  An obvious area of VR application.   See also previous posts on room design and furnuture.

Sotheby’s International Realty First Real Estate Brand to Launch Augmented Reality App: Introducing Curate by Sotheby’s International Realty

Sotheby’s International Realty Affiliates LLC today announced the launch of Curate by Sotheby’s International Realty, a mobile augmented reality (AR) app that will bring a home’s virtual staging images from 2-D perception into augmented reality.

“Buying a house is not only a significant financial decision, but is also deeply personal and emotional. Introducing an augmented reality component to the homebuying experience takes the consumer on a personal journey that allows them to see a house transformed into a home, their home, through the magic of technology.” – John Passerini, global vice president of interactive marketing, Sotheby’s International Realty Affiliates LLC

The app was built with ARCore, Google’s AR Software platform, and is powered by roOomy, the leading virtual staging technology platform specializing in 3D/AR/VR content creation and application development.  Curate by Sotheby’s International Realty allows consumers to visualize a house as their own before purchase, thereby curating the homebuying experience. Working closely with Google in the run up to ARCore’s release, the Sotheby’s International Realty® brand is the first real estate brand to launch and implement a virtual staging AR app, transforming the homebuying and selling experience for sales associates and consumers.  ... " 

kWantera: Intelligent Energy Analytics

Brought to my attention: kWantera   Impressive ideas.  With origins at CMU,  They write:

" ... kWantera is changing the way energy is bought, sold, and consumed with the goal of providing lower costs for buyers and higher profitability for sellers. The flexible yet complex nature of wholesale power markets gives almost anyone the opportunity, but no useful tools, to capture the daily savings and profit opportunities in these evolving markets. With kWantera, anyone can now reap the benefits of wholesale markets with accurate, consistent, and customized recommendations built on a data-driven understanding of the financial and physical market opportunities and risks in North America and the European Union energy markets. kWantera gives its customers the opportunity to make smarter daily buy, sell, and load management decisions through real-time predictive analytics. All of our recommendations are risk adjusted as well as time and location specific so our customers have the confidence to avoid unnecessary risks and make easy day-to-day energy decisions.  ... " 

Make an Offer on Amazon

Press release. Amazon competing with auction houses.  But not an auction.   Are there regulatory implicatons?  Continued following of auction structures in this blog.  See the Auction link below.

" ... Here’s how it works: Sellers enable the ‘Make an Offer’ feature for items to show customers they are willing to negotiate for a lower price than the price listed. When selecting ‘Make an Offer’ on an item’s product detail page, a customer can enter and submit a new price of their choosing. The seller will receive the customer’s lower price offer through email, at which point the seller can accept, reject or counter the offer. The seller and customer can continue to negotiate through email until the negotiation is complete. When a seller accepts a customer’s offer, the customer is notified and can place the item into their shopping cart at the agreed upon new price for checkout and purchase. ... " 

Browsers Getting to Know You, Quickly

In Radar O'Reilly: A description of the interaction between user and browser.  And a form of real time analytics at work.  The auction interaction is interesting, see the tag below for more on auction science in this blog.  The speed involved is remarkable.  " ... A small technological marvel occurs on almost every visit to a web page. In the seconds that elapse between the user’s click and the display of the page, an ad auction takes place in which hundreds of bidders gather whatever information they can get on the user, determine which ads are likely to be of interest, place bids, and transmit the winning ad to be placed in the page. ... " . 

Auctioneers Join Forces

More in the auction management space.   Which has many interesting ontological implications.  " ...  Six leading regional auction houses have joined forces to launch the online bidding platform Bidsquare.com. The firms, which include Brunk in Asheville, N.C.; Cowan’s in Cincinnati, Ohio; Leslie Hindman in Chicago; Pook & Pook, Inc, in Downingtown, Penn.; Rago in Lambertville, N.J.; and Skinner, Inc, in Boston, have combined annual sales of roughly $200 million. In a notable display of trust, the sometimes rivals have pooled their client mailing lists numbering 100,000 qualified buyers. The founders are inviting other reputable houses to join their initiative. ... "  

BidSquare Auctions

I have worked with an auction company in establishing their offering taxonomies.  Also have worked with the technical process of auctions.  I see that Cowan's auctions has now allied with several other companies to form a new online auction service BidSquare Auctions .  Following.  Their blog also has some interesting instructive content.

Design Pioneer Auction at Sothebys

Of interest, Includes Apple's SVP of Design, today at 7 PM EST:

" ... Two of the world’s foremost design pioneers, Sir Jonathan Ive, KBE, and Marc Newson, CBE, have collaborated with musician and philanthropist Bono to organize a (RED) Auction celebrating the very best of design and innovation. Jony and Marc have spent the past year and a half curating the collection, which comprises objects from disciplines as diverse as space travel and lighting design to contemporary art and rare automobiles, all unified and distinguished by their excellence and innovation ... "

Auction Technology

Have now been involved in several projects that dealt with auction technology and related decision and classification methods.  Both for supply side material acquisition and for classic 'auctions'  via auction houses and interactive bidding, both online and on site.   See my previous posts on this topic.

I note that there is an upcoming movie memorabilia auction being done by Bonhams and TCM.  Since much auction traffic these days is done online, I reviewed their site for the auction.  Very nicely done, with high speed results, imaging and categorization. Options for live access.   See the site here.

One failing I did see was a lack of complete tagging of individual items.

The auction starts live on November 25, 2013 at 1 PM EST and I will be following for a while.

Generating and Selling Books and Content

An article on book generation.  I have been involved for a few years book selling and auction systems, so this approach constructed by a professor at INSEAD to generate and even pre-generate books for sale on Amazon was most interesting.   The connection to automated content generation through AI intelligence techniques mirrors some of our own work.    Food for much more thought, the article contains a video that explains this in more detail:

Patented Book writing system creates, sells, hundreds of thousands of books on Amazon:

Philip M. Parker, Professor of Marketing at INSEAD Business School, has had a side project for over 10 years. He’s created a computer system that can write books about specific subjects in about 20 minutes. The patented algorithm has so far generated hundreds of thousands of books. In fact, Amazon lists over 100,000 books attributed to Parker, and over 700,000 works listed for his company, ICON Group International, Inc. This doesn’t include the private works, such as internal reports, created for companies or licensing of the system itself through a separate entity called EdgeMaven Media. ...  Parker is not so much an author as a compiler, but the end result is the same: boatloads of written works. ... "

Cowans Sells Duveneck Girl Portrait

I have been doing work looking at the use of social networking in the auction world.  This past weekend Cowan's Auctions sold Frank Duveneck's portrait of a girl for $42,300.  More here on the auction.  See Cowan's site for more information on social network enabled auctions.

Portrait of Young Girl by Frank Duveneck, Oil on Canvas 


Frank Duveneck (American, 1848-1919), signed and dated 92 l.l.; 19.5 x 15.5 in. 


Ex Mary Johnston, Glendale, OH; Descended in the family to the present owner.

Cowan's Auctions Special Collections

Cowan's Auctions, who I have been doing consulting work for, has started to do some online-only timed auctions.  This is different from online auctions like eBay, in that Cowan's has expert appraisers in a number of categories of auction items.  You can go to their site to bid, or to use their very extensive database of sold and pending items to estimate the value of your own goods.  They also have a presence on Live Auctioneers, where you can bid from an App on your Smartphone.  See also their well done Facebook page.

Tufte Library being Auctioned

Visual graphic data design guru Edward Tufte's library of design resources is being auctioned by Christies on December 2.