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Computationally Manageable Combinatorial Auctions
, 1998
"... There is interest in designing simultaneous auctions for situations in which the value of assets to a bidder depends upon which other assets he or she wins. In such cases, bidders may well wish to submit bids for combinations of assets. When this is allowed, the problem of determining the revenue ma ..."
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Cited by 314 (1 self)
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There is interest in designing simultaneous auctions for situations in which the value of assets to a bidder depends upon which other assets he or she wins. In such cases, bidders may well wish to submit bids for combinations of assets. When this is allowed, the problem of determining the revenue maximizing set of nonconflicting bids can be a difficult one. We analyze this problem, identifying several different structures of combinatorial bids for which computational tractability is constructively demonstrated and some structures for which computational tractability 1 Introduction Some auctions sell many assets simultaneously. Often these assets, like U.S. treasury bills, are interchangeable. However, sometimes the assets and the bids for them are distinct. This happens frequently, as in the U.S. Department of the Interior's simultaneous sales of offshore oil leases, in some private farm land auctions, and in the Federal Communications Commission's recent multibillion dollar sales...
Spectrum Auctions
, 2001
"... Auctions have emerged as the primary means of assigning spectrum licenses to companies wishing to provide wireless communication services. Since July 1994, the Federal Communications Commission (FCC) has conducted 33 spectrum auctions, assigning thousands of licenses to hundreds of firms. Countries ..."
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Cited by 314 (15 self)
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Auctions have emerged as the primary means of assigning spectrum licenses to companies wishing to provide wireless communication services. Since July 1994, the Federal Communications Commission (FCC) has conducted 33 spectrum auctions, assigning thousands of licenses to hundreds of firms. Countries throughout the world are conducting similar auctions. I review the current state of spectrum auctions. Both the design and performance of these auctions are addressed.
Taming the computational complexity of combinatorial auctions: Optimal and approximate approaches
, 1999
"... In combinatorial auctions, multiple goods are sold simultaneously and bidders may bid for arbitrary combinations of goods. Determining the outcome of such an auction is an optimization problem that is NPcomplete in the general case. We propose two methods of overcoming this apparent intractability. ..."
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Cited by 267 (9 self)
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In combinatorial auctions, multiple goods are sold simultaneously and bidders may bid for arbitrary combinations of goods. Determining the outcome of such an auction is an optimization problem that is NPcomplete in the general case. We propose two methods of overcoming this apparent intractability. The first method, which is guaranteed to be optimal, reduces running time by structuring the search space so that a modified depthfirst search usually avoids even considering allocations that contain conflicting bids. Caching and pruning are also used to speed searching. Our second method is a heuristic, marketbased approach. It sets up a virtual multiround auction in which a virtual agent represents each original bid bundle and places bids, according to a fixed strategy, for each good in that bundle. We show through experiments on synthetic data that (a) our first method finds optimal allocations quickly and offers good anytime performance, and (b) in many cases our second method, despite lacking guarantees regarding optimality or running time, quickly reaches solutions that are nearly optimal. 1 Combinatorial Auctions Auction theory has received increasing attention from computer scientists in recent years. 1 One reason is the explosion of internetbased auctions. The use of auctions in businesstobusiness trades is also increasing rapidly [Cortese and Stepanek, 1998]. Within AI there is growing interest in using auction mechanisms to solve distributed resource allocation problems. For example, auctions and other market mechanisms are used in network bandwidth allocation, distributed configuration design, factory scheduling, and operating system memory allocation [Clearwater, 1996]. Marketoriented programming has
Putting Auction Theory to Work: The Simultaneous Ascending Auction
 Journal of Political Economy
, 2000
"... I review the uses of economic theory in the initial design and later improvement of the ‘‘simultaneous ascending auction,’ ’ which was developed initially for the sale of radio spectrum licenses in the United States. I analyze some capabilities and limitations of the auction, the roles of various de ..."
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Cited by 194 (14 self)
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I review the uses of economic theory in the initial design and later improvement of the ‘‘simultaneous ascending auction,’ ’ which was developed initially for the sale of radio spectrum licenses in the United States. I analyze some capabilities and limitations of the auction, the roles of various detailed rules, the possibilities for introducing combinatorial bidding, and some considerations in adapting the auction for sales in which revenue, rather than efficiency, is the primary goal. I.
Computationally feasible VCG mechanisms
 In Proceedings of the Second ACM Conference on Electronic Commerce (EC’00
, 2000
"... A major achievement of mechanism design theory is a general method for the construction of truthful mechanisms called VCG. When applying this method to complex problems such as combinatorial auctions, a difficulty arises: VCG mechanisms are required to compute optimal outcomes and are therefore comp ..."
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Cited by 188 (5 self)
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A major achievement of mechanism design theory is a general method for the construction of truthful mechanisms called VCG. When applying this method to complex problems such as combinatorial auctions, a difficulty arises: VCG mechanisms are required to compute optimal outcomes and are therefore computationally infeasible. However, if the optimal outcome is replaced by the results of a suboptimal algorithm, the resulting mechanism (termed VCGbased) is no longer necessarily truthful. The first part of this paper studies this phenomenon in depth and shows that it is near 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 nontruthful VCGbased mechanisms. We generalize these results for affine maximizers. The second part of this paper proposes a general method for circumventing the above problem. We introduce a modification of VCGbased mechanisms in which the agents are given a chance to improve the output of the underlying algorithm. When the agents behave truthfully, the welfare obtained by the mechanism is at least as good as the one obtained by the algorithm’s output. We provide a strong rationale for truthtelling behavior. Our method satisfies individual rationality as well.
Iterative Combinatorial Auctions: Theory and Practice
, 2000
"... Combinatorial auctions, which allow agents to bid directly for bundles of resources, are necessary for optimal auctionbased solutions to resource allocation problems with agents that have nonadditive values for resources, such as distributed scheduling and task assignment problems. We introduc ..."
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Cited by 178 (24 self)
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Combinatorial auctions, which allow agents to bid directly for bundles of resources, are necessary for optimal auctionbased solutions to resource allocation problems with agents that have nonadditive values for resources, such as distributed scheduling and task assignment problems. We introduce iBundle, the first iterative combinatorial auction that is optimal for a reasonable agent bidding strategy, in this case myopic bestresponse bidding. Its optimality is proved with a novel connection to primaldual optimization theory. We demonstrate orders of magnitude performance improvements over the only other known optimal combinatorial auction, the Generalized Vickrey Auction.
Analyzing the Airwaves Auction
 Journal of Economic Perspectives
, 1998
"... The US government recently sold spectrum rights using an innovative auction design, the simultaneous ascending auction, invented by economic theorists. The auction outcomes were broadly consistent with the expectations of the theorists. The auction form should have many other applications. March 21, ..."
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Cited by 175 (6 self)
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The US government recently sold spectrum rights using an innovative auction design, the simultaneous ascending auction, invented by economic theorists. The auction outcomes were broadly consistent with the expectations of the theorists. The auction form should have many other applications. March 21, 1998 Just as the Nobel committee was recognizing game theory's role in economics by awarding the 1994 prize to John Nash, John Harsanyi, and Reinhard Selten, game theory was being put to its biggest use ever. Billions of dollars worth of spectrum licenses were being sold by the US government, using a novel auction form designed by economic theorists. Suddenly, game theory became news. William Safire in the New York Times called it "the greatest auction in history." The Economist remarked, "When government auctioneers need worldly advice, where can they turn? To mathematical economists, of course . . . As for the firms that want to get their hands on a sliver of the airwaves, their best bet is to go out first and hire themselves a good game theorist." Fortune said it was the "most dramatic example of game theory's new power . . . It was a triumph, not only for the FCC and the taxpayers, but also for game theory (and game theorists)." Forbes said, "Game theory, long an intellectual pastime, came into its own as a business tool." The Wall Street Journal said, "Game theory is hot." The government auctioned licenses to use the electromagnetic spectrum for personal communications services (PCS): mobile telephones, twoway paging, portable fax machines, and wireless computer networks. Thousands of licenses were offered, varying in both geographic coverage and the amount of spectrum covered. The bidders were the local, longdistance, and cellular telephone companies, as well as...
Combinatorial auctions: A survey
, 2000
"... Many auctions involve the sale of a variety of distinct assets. Examples are airport time slots, delivery routes and furniture. Because of complementarities (or substitution effects) between the different assets, bidders have preferences not just for particular items but for sets or bundles of items ..."
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Cited by 170 (1 self)
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Many auctions involve the sale of a variety of distinct assets. Examples are airport time slots, delivery routes and furniture. Because of complementarities (or substitution effects) between the different assets, bidders have preferences not just for particular items but for sets or bundles of items. For this reason, economic efficiency is enhanced if bidders are allowed to bid on bundles or combinations of different assets. This paper surveys the state of knowledge about the design of combinatorial auctions. Second, it uses this subject as a vehicle to convey the aspects of integer programming that are relevant for the
Towards a universal test suite for combinatorial auction algorithms
 In ACM Electronic Commerce
, 2000
"... General combinatorial auctions—auctions in which bidders place unrestricted bids for bundles of goods—are the subject of increasing study. Much of this work has focused on algorithms for finding an optimal or approximately optimal set of winning bids. Comparatively little attention has been paid to ..."
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Cited by 139 (9 self)
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General combinatorial auctions—auctions in which bidders place unrestricted bids for bundles of goods—are the subject of increasing study. Much of this work has focused on algorithms for finding an optimal or approximately optimal set of winning bids. Comparatively little attention has been paid to methodical evaluation and comparison of these algorithms. In particular, there has not been a systematic discussion of appropriate data sets that can serve as universally accepted and well motivated benchmarks. In this paper we present a suite of distribution families for generating realistic, economically motivated combinatorial bids in five broad realworld domains. We hope that this work will yield many comments, criticisms and extensions, bringing the community closer to a universal combinatorial auction test suite.