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.

Share

COinS
 
Dec 13th, 12:00 AM

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.