Parabolic Valuation

Parabolic 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. works like Logarithmic valuation, but with a different formula. Use this valuation if you want to bid more aggressively for a certain 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., but progressively less aggressively for amounts above and below that amount. The Parabolic valuation works such that the maximum cost offered for bandwidth occurs at a mid-point of quantity, rather than at a maximum specified quantity.

The Parabolic valuation applies a formula that corresponds to a curve on a graph. Setting the most bandwidth you could possibly want (maximum quantity, “Qty”) and a value you place on bandwidth (maximum value “Value”) creates a curve. The 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. bids based on the relationship of that curve to a third factor, the market rate. The agent reacts based on where the market rate intersects the curve on the graph.

You might want to set the maximum quantity based on one of two possible criteria:

1. Set Qty to correspond to the greatest amount of bandwidth you would consider obtaining. Note that your agent’s bid is zero at this point, so it is impossible for you to receive exactly this amount.
2. Set the maximum quantity to place the peak cost bid at a desired quantity. The peak cost bid will be offered at 50% of the maximum quantity you specify. For example, if you wanted to bid most aggressively at 20 Mbps One of the ways of expressing units of bandwidth-Megabits-per-second (1,000,000 bits-per-second)., you would set the maximum quantity to 20/0.5 = 40 Mbps.

The maximum out-of-pocket cost will be 50% of the value you set, as indicated by the graph. Continuing the previous example, if you are willing to pay up to $200 per Mbps (per month) for the 20 Mbps you desire, this is a total cost of $4,000 per month. The value you set is $4,000/0.5 = $8,000, as shown below.

Aside from the slight differences in “peak aggressiveness” quantity, the Parabolic valuation is much less aggressive than the Logarithmic valuation when bidding for very low units of bandwidth.