ATTac-2001 makes flight bidding decisions based on a cost-benefit analysis: in particular, ATTac-2001 computes the incremental cost of postponing bidding for a particular flight versus the value of delaying commitment. In this section, we describe the determination of the cost of postponing the bid.
Due to difficulties that compounded with more sophisticated approaches, ATTac-2001 used the following very simple model for estimating the price of a flight ticket at a given future time. It is evident from the formulation that--given --the expected price increase from time to time was very nearly of the form for some . It was also clear that as long as the price did not hit the artificial boundaries at $150 and $800, the constant must depend linearly on . This linear dependence coefficient was then estimated from several hundred flight price evolutions during the qualifying round. Thus, for this constant , the expected price increase from time to time was . When a price prediction was needed, this formula was first used for the first and most recent actual price observations to obtain a guess for , and then this was used in the formula again to estimate the future price. No change was predicted if the formula yielded a price decrease.
This approach suffers from systemic biases of various kinds (mainly due to the fact that the variance of price changes gets relatively smaller over longer periods of time), but was thought to be accurate enough for its use, which was to predict whether or not the ticket can be expected to get significantly more expensive over the next few minutes.
In practice, during TAC-01, ATTac-2001 started with the flight-lookahead parameter set to 3 (i.e., cost of postponing is the average of the predicted flight costs 1, 2, and 3 minutes in the future). However, this parameter was changed to 2 by the end of the finals in order to cause ATTac-2001 to delay its flight commitments further.