Bid Fees

Bid fees serve two purposes:

1. They limit the length of auctions and prevent auction instability
2. They provide a revenue stream for pure bandwidth exchange “brokers”

Bid fees work as follows.

The Resource agent has pre-configured settings for the following values:

• initial bid fee increment
• number of bids to double fee increment (MaxNbids)
• maximum bid fee

The fee for submitting a bid increases continuously throughout the auction. As the bid fee increases, it influences an agent’s behavior in two stages.

The first effect is that the agent does not submit a new bid if it appears that the bid fee outweighs the financial benefit resulting from the bid. This can be considered a “soft limit” imposed by the bid fee.

If the auction continues past this point, there is also a hard limit involved¾as soon as the bid fee reaches the maximum bid fee value, the auction is stopped and allocations are made based on the last bids received.

The Resource agent keeps track of the bid fee for each bidder. Each time it gets a bid from any bidder the Resource agent increments the bid fee and inform all bidders what the new value is. Every time the number of total bids reaches the configured “MaxNbids,” the bid fee increment is doubled.

Example

If the initial bid fee increment is 1, and MaxNbids is 100, then the bid fee after the first bid is 1, after the second bid it is 2, and so on, until 100 bids are received. Thereafter the bid fee increment doubles, so that, following the next bid, the fee is 102, then 104, then 106, and so on. After 200 bids, the fee starts incrementing by 4 each bid, after 300 bids, by 8, and so on.

For more information see "Use of Bid Fees."