A Bidding Strategy in Combinatorial Auctions

Abstract

Combinatorial auctions are auctions in which bidders bid on combinations of items, bundles, instead of on individual items. In these auctions, bidders always tend to construct and bid on the most beneficial bundles of items, while facing a substantial number of items. Since there are a huge number of items available in a combinatorial auction, deciding on which items to put in bundles is a challenge for bidders. In combinatorial auctions, bundling of items and bidding on the best possible bundles are of great importance and developing an efficient bidding strategy can increase quality of the auctions considerably. In this paper, we have proposed an efficient bidding strategy. Performance of the proposed strategy in various markets has been simulated and compared with the bidding strategies already available in the literature. The obtained results show that in comparison with the previously available bidding strategies, the proposed strategy is more beneficial to both bidders and auctioneer, especially in markets where there is a considerable difference between values of items.