From "Take-it-or-leave-it" offers to "Take-it-or-be-left-out" Ultimatum - A trade mechanism for Online Services

Abstract

In a world, where more and more businesses seem to trade in an online market, the supply of online services to supply the ever-growing demand could quickly reach its capacity limits. Online service providers may find themselves maxed out at peak operation levels during high-traffic timeslots but too little demand during low-traffic timeslots, although the latter is becoming less frequent. At this point not only deciding which user is allocated what level of service becomes essential, but also the magnitude of the service provided, can be controlled by pricing. Pricing is an important factor when efficient and acceptable allocation of resources between individuals must be reached. Without prices, transferring or sharing goods would be impossible. In sharing information, pricing a product however is not as simple as relatively pricing an apple or a pear. Often the costs, and hence the prices are simply unknown. Backed by this scenario, the online services market could be combined with the market design mechanism of diamonds. For this we propose an ultimatum pricing strategy which effectively allows for valuations to be accounted for, but no longer a necessity when pricing in grid, cloud or other online computing environments.