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61
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 191 (25 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.
Frugal path mechanisms
, 2002
"... We consider the problem of selecting a low cost s − t path in a graph, where the edge costs are a secret known only to the various economic agents who own them. To solve this problem, Nisan and Ronen applied the celebrated VickreyClarkeGroves (VCG) mechanism, which pays a premium to induce the edg ..."
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Cited by 119 (2 self)
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We consider the problem of selecting a low cost s − t path in a graph, where the edge costs are a secret known only to the various economic agents who own them. To solve this problem, Nisan and Ronen applied the celebrated VickreyClarkeGroves (VCG) mechanism, which pays a premium to induce the edges to reveal their costs truthfully. We observe that this premium can be unacceptably high. There are simple instances where the mechanism pays Θ(k) times the actual cost of the path, even if there is an alternate path available that costs only (1 + ɛ) times as much. This inspires the frugal path problem, which is to design a mechanism that selects a path and induces truthful cost revelation without paying such a high premium. This paper contributes negative results on the frugal path problem. On two large classes of graphs, including ones having three nodedisjoint s − t paths, we prove that no reasonable mechanism can always avoid paying a high premium to induce truthtelling. In particular, we introduce a general class of min function mechanisms, and show that all min function mechanisms can be forced to overpay just as badly as VCG. On the other hand, we prove that (on two large classes of graphs) every truthful mechanism satisfying some reasonable properties is a min function mechanism. 1
iBundle: An Efficient Ascending Price Bundle Auction
 In ACM Conference on Electronic Commerce
, 1999
"... Standard auction mechanisms often break down in important ecommerce applications, where agents demand bundles of complementary resources, i.e. "I only want B if I also get A". This paper describes Bundle, an ascendingprice auction that is guaranteed to compute optimal bundle allocations ..."
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Cited by 118 (12 self)
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Standard auction mechanisms often break down in important ecommerce applications, where agents demand bundles of complementary resources, i.e. "I only want B if I also get A". This paper describes Bundle, an ascendingprice auction that is guaranteed to compute optimal bundle allocations with agents that follow a bestresponse bidding strategy. The auction prices bundles directly and allows agents to place additive or exclusiveor bids over collections of bundles. Empirical results confirm that Bundle generates efficient allocations for hard resource allocation problems. Furthermore, we show that Bundle generates solutions without complete revelation (or computation) of agent preferences. Keywords Iterative auction, agentmediated electronic commerce, resource allocation, bundling problem, price discrimination.
Preference Elicitation in Combinatorial Auctions (Extended Abstract)
 IN PROCEEDINGS OF THE ACM CONFERENCE ON ELECTRONIC COMMERCE (ACMEC
, 2001
"... Combinatorial auctions (CAs) where bidders can bid on bundles of items can be very desirable market mechanisms when the items sold exhibit complementarity and/or substitutability, so the bidder's valuations for bundles are not additive. However, in a basic CA, the bidders may need to bid on e ..."
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Cited by 108 (27 self)
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Combinatorial auctions (CAs) where bidders can bid on bundles of items can be very desirable market mechanisms when the items sold exhibit complementarity and/or substitutability, so the bidder's valuations for bundles are not additive. However, in a basic CA, the bidders may need to bid on exponentially many bundles, leading to di#culties in determining those valuations, undesirable information revelation, and unnecessary communication. In this paper we present a design of an auctioneer agent that uses topological structure inherent in the problem to reduce the amount of information that it needs from the bidders. An analysis tool is presented as well as data structures for storing and optimally assimilating the information received from the bidders. Using this information, the agent then narrows down the set of desirable (welfaremaximizing or Paretoe#cient) allocations, and decides which questions to ask next. Several algorithms are presented that ask the bidders for value, order, and rank information. A method is presented for making the elicitor incentive compatible.
Vote Elicitation: Complexity and StrategyProofness
, 2002
"... significant attention in singleagent settings. It is also a key problem in multiagent systems, but has received little attention here so far. In this setting, the agents may have different preferences that often must be aggregated using voting. ..."
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Cited by 86 (20 self)
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significant attention in singleagent settings. It is also a key problem in multiagent systems, but has received little attention here so far. In this setting, the agents may have different preferences that often must be aggregated using voting.
Preventing Strategic Manipulation in Iterative Auctions: Proxy Agents and PriceAdjustment
, 2000
"... Iterative auctions have many computational advantages over sealedbid auctions, but can present new possibilities for strategic manipulation. We propose a twostage technique to make iterative auctions that compute optimal allocations with myopic bestresponse bidding strategies more robust to manip ..."
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Cited by 63 (13 self)
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Iterative auctions have many computational advantages over sealedbid auctions, but can present new possibilities for strategic manipulation. We propose a twostage technique to make iterative auctions that compute optimal allocations with myopic bestresponse bidding strategies more robust to manipulation. First, introduce proxy bidding agents to constrain bidding strategies to (possibly untruthful) myopic bestresponse. Second, after...
Economics and Electronic Commerce: Survey and Directions for Research
 INTERNATIONAL JOURNAL OF ELECTRONIC COMMERCE
, 2001
"... This article reviews the growing body of research on electronic commerce from the perspective of economic analysis. It begins by constructing a new framework for understanding electronic commerce research, then identifies the range of applicable theory and current research in the context of the new ..."
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Cited by 60 (11 self)
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This article reviews the growing body of research on electronic commerce from the perspective of economic analysis. It begins by constructing a new framework for understanding electronic commerce research, then identifies the range of applicable theory and current research in the context of the new conceptual model. It goes on to assess the stateoftheart of knowledge about electronic commerce phenomena in terms of the levels of analysis here proposed. And finally, it charts the directions along which useful work in this area might be developed. This survey and framework are intended to induce researchers in the field of information systems, the authors’ reference discipline, and other areas in schools of business and management to recognize that research on electronic commerce is businessschool research, broadly defined. As such, developments in this research area in the next several years will occur across multiple businessschool disciplines, and there will be a growing impetus for greater interdisciplinary communication and interaction.
Costly valuation computation in auctions
 IN IN PROCEEDINGS OF THE EIGHTH CONFERENCE OF THEORETICAL ASPECTS OF KNOWLEDGE AND RATIONALITY (TARK VIII), SIENNA
, 2001
"... We investigate deliberation and bidding strategies of agents with unlimited but costly computation who are participating in auctions. The agents do not a priori know their valuations for the items begin auctioned. Instead they devote computational resources to compute their valuations. We present a ..."
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Cited by 54 (26 self)
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We investigate deliberation and bidding strategies of agents with unlimited but costly computation who are participating in auctions. The agents do not a priori know their valuations for the items begin auctioned. Instead they devote computational resources to compute their valuations. We present a normative model of bounded rationality where deliberation actions of agents are incorporated into strategies and equilibria are analyzed for standard auction protocols. We show that even in settings such as English auctions where information about other agents ’ valuations is revealed for free by the bidding process, agents may still compute on opponents’ valuation problems, incurring a cost, in order to determine how to bid. We compare the costly computation model of bounded rationality with a different model where computation is free but limited. For some auction mechanisms the equilibrium strategies are substantially different. It can be concluded that the model of bounded rationality impacts the agents’ equilibrium strategies and must be considered when designing mechanisms for computationally limited agents.
Computational Criticisms of the Revelation Principle
, 2003
"... The revelation principle is a cornerstone tool in mechanism design. It states that one can restrict attention, without loss in the designer's objective, to mechanisms in which A) the agents report their types completely in a single step up front, and B) the agents are motivated to be truthful. ..."
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Cited by 45 (11 self)
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The revelation principle is a cornerstone tool in mechanism design. It states that one can restrict attention, without loss in the designer's objective, to mechanisms in which A) the agents report their types completely in a single step up front, and B) the agents are motivated to be truthful. We show that reasonable constraints on computation and communication can invalidate the revelation principle. Regarding A, we show that by moving to multistep mechanisms, one can reduce exponential communication and computation to linearthereby answering a recognized important open question in mechanism design. Regarding B, we criticize the focus on truthful mechanismsa dogma that has, to our knowledge, never been criticized before. First, we study settings where the optimal truthful mechanism is complete to execute for the center. In that setting we show that by moving to insincere mechanisms, one can shift the burden of having to solve the complete problem from the center to one of the agents. Second, we study a new oracle model that captures the setting where utility values can be hard to compute even when all the pertinent information is availablea situation that occurs in many practical applications. In this model we show that by moving to insincere mechanisms, one can shift the burden of having to ask the oracle an exponential number of costly queries from the center to one of the agents. In both cases the insincere mechanism is equally good as the optimal truthful mechanism in the presence of unlimited computation. More interestingly, whereas being unable to carry out either difficult task would have hurt the center in achieving his objective in the truthful setting, if the agent is unable to carry out either difficult task, the value of the center's objec...
Bargaining with Limited Computation: Deliberation Equilibrium
 ARTIFICIAL INTELLIGENCE
, 2001
"... We develop a normative theory of interactionnegotiation in particularamong selfinterested computationally limited agents where computational actions are game theoretically treated as part of an agent's strategy. We focus on a 2agent setting where each agent has an intractable individual ..."
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Cited by 44 (18 self)
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We develop a normative theory of interactionnegotiation in particularamong selfinterested computationally limited agents where computational actions are game theoretically treated as part of an agent's strategy. We focus on a 2agent setting where each agent has an intractable individual problem, and there is a potential gain from pooling the problems, giving rise to an intractable joint problem. At any time, an agent can compute to improve its solution to its own problem, its opponent's problem, or the joint problem. At a deadline the agents then decide whether to implement the joint solution, and if so, how to divide its value (or cost). We present a fully normative model for controlling anytime algorithms where each agent has statistical performance profiles which are optimally conditioned on the problem instance as well as on the path of results of the algorithm run so far. Using this model, we introduce a solution concept, which we call deliberation equilibrium. It is the perfect Bayesian equilibrium of the game where deliberation actions are part of each agent's strategy. The equilibria differ based on whether the performance profiles are deterministic or stochastic, whether the deadline is known or not, and whether the proposer is known in advance or not. We present algorithms for finding the equilibria. Finally, we show that there exist instances of the deliberationbargaining problem where no pure strategy equilibria exist and also instances where the unique equilibrium outcome is not Pareto efficient.