Budget Valuation
The Budget valuation has a single configurable parameter – the “budget,” which is the total out-of-pocket amount you are willing to pay for any amount of bandwidth.
This is the easiest valuation to understand and configure. Use it when you want to purchase the maximum amount of bandwidth possible in each auction round.
Your agent will begin by offering the unit price corresponding to your budget for all the bandwidth available. If your agent is informed it will not receive this full allocation because the offered price is too low, it will bid again. The new bid will raise the unit price offered and lower the desired quantity requested so that the out-of-pocket amount remains the same. Of course, other agents may re-bid also when your offer is provisionally accepted, but theirs is not. This process continues until all bandwidth is apportioned among all bidders who are willing to pay the market price.
The graph below shows the calculation your agent does in
response to rising market
prices.
There are two disadvantages to the Budget valuation:
1. Because you begin bidding by asking for all the bandwidth at your budgeted price, you will set the price floor instead of the seller if your unit price is higher than his configured floor price.
2. If your budgeted amount is low compared to other bidders, you could end up paying your entire budget for a very small amount of bandwidth. Your agent will continue to offer your entire budget for amounts as small as 1/500 of what is being offered, before it finally gives up and lets itself receive no allocation.
An advantage of the Budget valuation is that your agent will always begin by bidding for the full amount of bandwidth the seller is offering, whether it increases or decreases over time. With most of the other valuations, you must specify the maximum quantity you are interested in obtaining and would have to increase this setting to obtain more if the seller offered more.