Valuations Overview
In the course of an auction, your agent uses this valuation information to determine whether to bid, how much bandwidth to ask for, and how much to offer, in response to changing market conditions.
The valuation windows represent how you, as a buyer, value varying amounts of bandwidth.
You choose a valuation from the Valuation pull-down menu.
The first item in the menu, Show Only One, controls whether multiple valuation windows can be displayed. If a check mark appears before this control, only one valuation can appear on the desktop.
Each valuation has a Current radio button label at the top of the window. Select the Current button to make a valuation active (this automatically de-selects whichever valuation had been active). The green arrow in the menu-bar pull-down list also indicates which valuation is active.
Valuations use different parameters to change their shapes and values, but all result in a representation of valuation and cost for a quantity of bandwidth. The chart to the left of the numerical entry boxes shows two curves; the red curve represents valuation relative to quantity and the yellow one is a representation of maximum cost relative to quantity. If there appears to be only one curve, then both curves are identical and overlapping.
Red Curve
Valuation, represented by the red curve, is an abstract concept that economists use to indicate the changing value buyers put on a resource. Mathematically, it is the area under the curve (that is, the integral) of unit price verses quantity. Merkato uses this curve to determine the actual bids to be placed.
Yellow Curve
More valuable for non-economists is the yellow curve. This curve represents the maximum out-of-pocket expense you would pay per quantity of allocated bandwidth. Whether you actually pay this amount depends on whether you obtain the last amount of bandwidth sold. (See Error! Reference source not found. on page 74).
Types of Valuations
You create a valuation profile by entering values for price and quantity. The following sections describe each valuation profile in detail.
The choices are:
Budget Valuation Valuation is configured to have a constant cost for all units of bandwidth.
Budget Valuation with Limits Same as budget valuation but you can set the minimum and maximum bandwidth for which you will offer your fixed cost amount.
Linear Valuation Bidding at a constant unit price regardless of the quantity. Similar to a take-it-or-leave-it bid. You may get less quantity than you ask for, but the unit price will never exceed what you offer.
Square Root Valuation Similar to budget valuation except you lower the total cost you are willing to pay as bandwidth decreases.
Logarithmic
Valuation Use this valuation if you wish to bid aggressively at a
mid-point in the quantity range and less aggressively for higher or lower
amounts. The agent using this valuation bids most aggressively at 37% if the
maximum quantity you specify.
The following chart compares the types of valuations.
This chart shows the relative bidding strategies for each of the valuations, all normalized to a maximum cost of $10,000 per month and a maximum desired quantity of 100 Mbps.