Start Date
12-13-2015
Description
Bidders in larger combinatorial auctions face a coordination problem, which has received little attention in the literature. Losing bidders need to submit non-overlapping package bids which are high enough to outbid the standing winners. The proposed auction leverages the information that the auctioneer collects throughout the auction about the preferences of individual bidders and suggests prices for the members of losing bidder coalitions, which in total would make a given coalition winning. We model the bidder's bundle selection problem as a coordination game, which provides a theoretical rationale for bidders to agree to these prices. Results of experiments with human participants demonstrate that this type of pricing substantially reduces the number of auction rounds and bids necessary to find a competitive equilibrium without sacrificing auction efficiency. This rapid convergence is crucial for the practical viability of combinatorial auctions in larger markets.
Recommended Citation
Bichler, Martin; Hao, Zhen; and Adomavicius, Gediminas, "Coordination and Pricing in Multi-Object Auctions" (2015). ICIS 2015 Proceedings. 9.
https://aisel.aisnet.org/icis2015/proceedings/eBizeGov/9
Coordination and Pricing in Multi-Object Auctions
Bidders in larger combinatorial auctions face a coordination problem, which has received little attention in the literature. Losing bidders need to submit non-overlapping package bids which are high enough to outbid the standing winners. The proposed auction leverages the information that the auctioneer collects throughout the auction about the preferences of individual bidders and suggests prices for the members of losing bidder coalitions, which in total would make a given coalition winning. We model the bidder's bundle selection problem as a coordination game, which provides a theoretical rationale for bidders to agree to these prices. Results of experiments with human participants demonstrate that this type of pricing substantially reduces the number of auction rounds and bids necessary to find a competitive equilibrium without sacrificing auction efficiency. This rapid convergence is crucial for the practical viability of combinatorial auctions in larger markets.