One of the major achievements of mechanism design theory is the family of truthful (incentive compatible) mechanisms often called VCG (named after Vickrey, Clarke and Groves). When applying VCG mechanisms to complex mechanism design problems such as combinatorial auctions a problem emerges: even finding optimal outcomes is computationally intractable. A striking observation is that if the optimal outcome is replaced by the results of computationally tractable approximation algorithms or heuristics then the resulting mechanism (termed VCG-based) is no longer necessarily truthful! The first part of this paper considers this problem in depth and shows that it is almost universal. Specifically, we prove that essentially all reasonable approximations or heuristics for combinatorial auctions as well as a wide class of cost minimization problems yield non-truthful VCG-based mechanisms. The second part of this paper proposes a method for handling this non-truthfulness. We introduce a...

When attempting to design a truthful mechanism for a computationally hard problem such as combinatorial auctions, one is faced with the problem that most efficiently computable heuristics can not be embedded in any truthful mechanism (e.g. VCG-like payment rules will not ensure truthfulness). We develop a set of techniques that allow constructing efficiently computable truthful mechanisms for combinatorial auctions in the special case where each bidder desires a specific known subset of items and only the valuation is unknown by the mechanism (the single parameter case). For this case we extend the work of Lehmann O’Callaghan, and Shoham, who presented greedy heuristics. We show how to use IF-THEN-ELSE constructs, perform a partial search, and use the LP relaxation. We apply these techniques for several canonical types of combinatorial auctions, obtaining truthful mechanisms with provable approximation ratios. 1

We are interested in supporting multi-agent contracting, in which customer agents solicit the resources and capabilities of other, self-interested agents in order to accomplish their goals. Goals may

We study auctions with severe bounds on the communication allowed: each bidder may only transmit t bits of information to the auctioneer. We consider both welfare-maximizing and revenuemaximizing auctions under this communication restriction. For both measures, we determine the optimal auction and show that the loss incurred relative to unconstrained auctions is mild. We prove non-surprising properties of these kinds of auctions, e.g. that discrete prices are informationally ecient, as well as some surprising properties, e.g. that asymmetric auctions are better than symmetric ones.

In a dynamic and open environment negotiation protocols cannot be known beforehand. We propose a methodology for constructing exible negotiation protocols based on joint actions and dialogue games. We view negotiation as a combination of joint actions. Simple dialogue games that consist of initiatives followed by responses function as `recipes for joint action' from which larger interactions can be constructed coherently.

Many recent applications of interest involve self-interested participants. As such participants, termed agents, may manipulate the algorithm for their own benefit, a new challenge emerges: The design of algorithms and protocols that perform well when the agents behave according to their own self-interest. This led several researchers to consider computational models that are based on a sub-field of game-theory and micro-economics called mechanism design. This paper introduces this topic mainly through examples. It demonstrates that in many cases selfishness can be satisfactorily overcome, surveys some of the recent trends in this area and presents new challenging problems. The paper is mostly based on classic results from mechanism design as well as on recent work by the author and others.

We present a system for multi-agent contract negotiation, implemented as an auctionbased market architecture called MAGNET. A principal feature of MAGNET is support for negotiation of contracts based on temporal and precedence constraints. We propose using an extended combinatorial auction paradigm to support these negotiations.

Supply chain formation is an important problem in the commercial world, and can be improved by greater automated support. Hence, the multiagent systems community should work to develop new solutions to the problem. The problem is complex and challenging, and a complete model must encompass a number of issues. In this paper we highlight some issues that must be understood to make progress in modeling supply chain formation.

1 In the last few years, the electronic marketplace has witnessed an exponential growth in worth and size, and projections are for this trend to intensify in coming years. Yet, the tools available to market players are very limited, thus imposing restrictions on their ability to exploit market opportunities. While the Internet oers great possiblities for creation of spontaneous communities, this potential has not been explored as a means for creating economies of scale among similar-minded customers. In this paper, we report on coalition formation as a means to formation of groups of customers coming together to procure goods at a volume discount (\buying clubs") and economic incentives for creation of such groups. We also present a exible test-bed system that is used to implement and test coalition formation and multi-lateral negotiation protocols, and show use of the test-bed system as a tool for implementation of a real-world \buying club". 1 Introduction A coaliti...

We introduce a class of mechanisms, called bidding clubs, for agents to coordinate their bidding in auctions. In a bidding club agents first conduct a "pre-auction" within the club; depending on the outcome of the pre-auction some subset of the members of the club bid in the primary auction in a prescribed way; and, in some cases, certain monetary transfers take place after the auction. Bidding clubs have self-enforcing collusion properties in the context of secondprice auctions. We show that this is still true when multiple auctions take place for substitutable goods, as well as for complementary goods. We also present a bidding club protocol for first-price auctions. Finally, we show cases where bidding clubs have self-enforcing cooperation protocols in arbitrary mechanisms. 1. INTRODUCTION With the exploding popularity of auctions on the Internet and elsewhere has come increased interest in systems to assist (software or human) agents bidding in such auctions. Most of these system...