A pricing scheme for combinatorial auctions based on bundle sizes

Abstract

In combinatorial auctions not only single items but also bundles of items are sold simultaneously. A substantial ingredient to an auction mechanism is the way prices of bundles are determined. Prices determine the auctioneer׳s revenue and, ideally, justify the outcome of the auction to the bidder. Each bidder should be able to see why he won or lost a certain bundle comparing the determined price for a bundle and his bid׳s value. It is well known that linear prices cannot guarantee such a justification. We propose a new pricing scheme adding prices for bundle sizes to the traditional linear prices for items. We analyze this scheme and evaluate its ability to provide prices supporting a given allocation by means of a computational study using a well established combinatorial auctions test suite. We also compare our scheme to a scheme from literature with respect to the ability to generate market clearing prices.