Adaptive Price Mechanism and a Sequential Reverse Auction Model in Social Commerce

The paper derives a theoretical model, along with a piece of empirical evidence, of the determination of prices at which a seller sells objects in the "Facebook Group Marketplace" using an adaptive price mechanism and a sequential reverse auction model. This is an informal marketplace and has been developed by Facebook users. The paper considers the single object demand case. In the end, the paper explains the model empirically. The interesting part of this auction process is that both the buyer and the seller have the private information to exploit each other. Hence, no one is in an advantageous position. The paper gives a mechanism to sell the indivisible object in an asymmetry auction. Especially, tries to answer the question the fact that, if buyers in an auction are uncertain about the value of the item being sold, how will the seller set bid in the reverse auction mechanism? Buyers do not always know exactly how much they value a good. An adoptive price mechanism has been proposed here so that different bids can be set to heterogeneous buyers