Budget Valuation with Limits

The Budget Valuation with Limits is the one most commonly used, and the only valuation currently supported by the Wizard configuration application.

Below is the Budget Valuation with Limits in the Desktop interface.

Below is the Budget Valuation with Limits in the Express interface.

There are three parameters that determine the bidding behavior for this valuation:

• Budget—The maximum out-of-pocket amount you are willing to spend
• Max Qty—The maximum amount of bandwidth you desire
• Min Qty—The minimum amount of bandwidth for which you are willing to pay your budgeted amount

Your agent 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, 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 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 1/300 of the maximum quantity—either the Seller’s offered amount or the amount you specify in the Qty field, whichever is smaller. Automatic bidding increments in amounts no smaller than 1/300 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 300 Mbps 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.