A Probabilistic Mechanism Design for Online Auctions

Recently, there has been a rapid growth of the online auctions in e-commerce platforms, in which small and/or medium-sized enterprises (SMEs) heavily depend on the advertising systems. In this paper, we design flexible mechanisms to reduce the competition of SMEs without affecting competitive large companies in order to maximize the profit of e-commerce platform and to keep the ecosystem healthy. A probabilistic pricing mechanism design approach is investigated for online auctions. Utilizing this approach, we introduce the notation of simple mechanisms as a tool for designing new mechanisms. Based on a simple and a classical, the proposed mechanism probabilistic mechanisms are designed and their properties are analyzed. Furthermore, we devise two mechanism design algorithms for different application scenarios. Experiments are presented to demonstrate the flexibility and the effectiveness of the proposed probabilistic mechanism design approach.