Budget Valuation with Limits

The Budget Valuation The value a buyer or seller places on bandwidth. Setting a valuation is part of setting a purchasing strategy. Valuation settings within a buyer agent let buyers specify the amount they are willing to pay for varying amounts of bandwidth. This information is used by the agent to respond to changing market conditions during a Merkato progressive second price auction. with Limits is the one most commonly used, and the only valuation currently supported by the Wizard In Merkato, an automated series of inquiry screens that walks you through the process of creating and configuring a buyer agent. configuration application. There are three parameters that determine the bidding behavior for this valuation:

• Budget¾The maximum out-of-pocket amount you are willing to spend
• Max Qty¾The maximum amount of bandwidth The amount of data transmitted or received per unit of time. When we refer to acquiring or selling bandwidth, we mean the amount of information that can be sent over a connection at one time, at the allowed speed, without packet loss or excessive delay. Bandwidth is measured in bits-per-second. you desire
• Min Qty¾The minimum amount of bandwidth for which you are willing to pay your budgeted amount

Your agent The program that interacts with the rest of Merkato on behalf of buyers and sellers. Buyers can acquire bandwidth by configuring their agents to offer the price they are willing to pay for a range of available quantity, or use their agent to request a quote for a fixed-price bandwidth reservation. Sellers configure their agents with a quantity of bandwidth for sale and a minimum price they are willing to accept for that quantity. begins bidding for your configured maximum quantity at the unit price represented by your budget. If your agent finds that it will not receive this allocation An amount of bandwidth available for your use. Depending on the type of service being offered through Merkato, this can represent the maximum bandwidth available to you or a minimum guarantee of bandwidth available to you., it bids for a lower amount of bandwidth at a higher unit price, so that the total out-of-pocket amount remains the same. This behavior continues until either the agent receives the amount requested or the minimum specified quantity is reached. At this point, the agent makes one final bid for the minimum quantity at the unit price represented by the budget.

Three outcomes are possible:

• The agent receives the requested amount of bandwidth at the market price The price for something that buyers and sellers agree on. Merkato establishes a market price for bandwidth during each spot market The Merkato mechanism by which bandwidth is traded, in a progressive second price auction. An optimal fair market price is established and bandwidth is allocated to buyers, based on their bids relative to other buyers. auction round. There is a fixed amount for sale, so as demand increases, prices rise. The market price is reached when the cumulative demand of all the buyers is exactly equal to the amount of bandwidth being offered by the seller. set by the lowest successful bidder.
• The agent is the lowest successful bidder and receives a portion of the requested amount.
• The offered bid price is less than the market price and the agent does not receive an allocation this round.

There are advantages to this valuation:

·        By restricting the amount of bandwidth initially requested, you will make bandwidth available for lower bidders who would set the market price. The result is that you pay less than your budgeted amount for the bandwidth you receive.

• By setting a lower boundary on bandwidth desired, you do not offer your full budget for a very small amount, should bidding become very aggressive. Of course, you run the risk of receiving no allocation of bandwidth at all and share the best-effort queue with the other bidders who also received no allocation, or are currently not participating in the auction.

You should be careful about setting your maximum quantity to All.

A Buyer agent will not bid for an amount smaller than 1/500 of the maximum quantity—either the Seller’s offered amount or the amount you specify in the Qty field, which ever is smaller. Automatic bidding increments in amounts no smaller than 1/500 of the maximum.

If you specify “All” in the Max Qty field, and the Seller offers a lot of bandwidth, the minimum bid may be very large. If you have no maximum, and the Seller offers 500 Mbps One of the ways of expressing units of bandwidth-Megabits-per-second (1,000,000 bits-per-second). in the Merkato auction, your agent will bid for no less than 1 Mbps. Even if you want more than 1 Mbps, your agent will bid for bandwidth in increments of 1 Mbps—bidding for 1.5 Mbps will not be possible.