Efficiency with linear prices

Martin Bichler, Pasha Shabalin, Georg Ziegler
2010 Proceedings of the 11th ACM conference on Electronic commerce - EC '10  
Combinatorial auctions have been suggested as a means to raise efficiency in multi-item negotiations with complementarities among goods as they can be found in procurement, energy markets, transportation, and the sale of spectrum auctions. The Combinatorial Clock (CC) auction has become very popular in these markets for its simplicity and for its highly usable price discovery, derived by the use of linear prices. Unfortunately, no equilibrium bidding strategies are known. Given the importance
more » ... the CC auction in the field, it is highly desirable to understand whether there are efficient versions of the CC auction, providing a strong game theoretical solution concept. So far, equilibrium strategies have only been found for combinatorial auctions with non-linear and personalized prices for very restricted sets of bidder valuations. We provide an extension of the CC auction, the CC+ auction, and show that it actually leads to efficient outcomes in an ex-post equilibrium for general valuations with only linear ask prices. We also provide a theoretical analysis on the worst case efficiency of the CC auction, which highlights problems in the valuations, in which the CC is very inefficient. As in all other theoretical models of combinatorial auctions, bidders in the field might not be able to follow the equilibrium strategies suggested by the game-theoretical predictions. Therefore, we complement the theoretical findings with results from computational experiments using realistic value models. This analysis helps to understand the impact of deviations from the equilibrium strategy and the robustness of such auctions. The experimental analysis shows that the CC auction and its extensions have a number of virtues in practical applications, in particular a low number of auction rounds and bids submitted compared to auction designs with non-linear and personalized ask prices.
doi:10.1145/1807342.1807388 dblp:conf/sigecom/BichlerSZ10 fatcat:7lcbubbwuvdlzkxukfxcn2ugyq