Abstract
Increasing popularity of online auctions and the associated frauds have drawn the attention of many researchers. It is found that most of the auction sites prefer English auction to other auction mechanisms. The ease of adopting multiple fake identities over the Internet nourishes shill bidding by fraudulent sellers in English auction. In this paper we derive an equilibrium bidding strategy to counteract shill bidding in online English auction. We develop an
algorithm based on this strategy. An eBay like auction environment is simulated. Experiments are conducted in this environment to evaluate this strategy. Five more popular bidding strategies are compared with the proposed strategy. In the experiment, the bidders are randomly assigned a bidding strategy. All the bidders draw their valuation from the uniform distribution. The bidders compete to buy a product in the presence of a shill. The average expected utility of the agents with proposed strategy is found to be the highest when the auction continues for a longer duration.
