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Monday, November 06, 2006

Jellyfish Smack Deals: Dutch Auctions Go Retail

Jellyfish offers a Smack Shopping Deal of the Day where users participate in what is essentially a Dutch auction. The price of an item (i.e. iPod) is lowered until someone offers to buy it. The trick is that there are a limited number of iPods in stock so you can't wait too long to bid.

There are a lot of psychological and game theoretic ideas that float around this version of the Dutch auction. Jellyfish is sort of bringing a social networking aspect to online shopping. I can see this getting very popular since there's an undercurrent of excitement and preemption about anticipating your opponents' (fellow shoppers) actions all the while trying to get the lowest price.

It's also collaborative since ideally players (shoppers) want to get the lowest price so they should cooperate (i.e. not bid) until the price falls to an absurdly low level. But then there is an incentive to cheat (buy before everyone else) by some players, and there's no way to root it out since you don't know who beat you to the deal (and you can't really punish them). Tit-for-tat doesn't work even though the game is iterative.

Fascinating stuff and good deals too.



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