An auction agent for bidding on combinatorial items

Abstract

In this paper, the authors describe and analyze the performance of a technique for maximizing the profit when bidding for a combination of goods from multiple auctions that are being conducted independently. First, they classified the methods of combining the goods when the goods are complementary goods, independent goods, or substitutive goods, and for each method, they derived the region in which a positive profit was obtained when the final winning price was known. Next, they proposed a bidding strategy for sequential auctions when the winning price was represented by a probability distribution, and performed a numerical analysis, in particular, when the probability distribution was assumed to be a uniform distribution. They performed two simulation experiments for the proposed strategy to evaluate its performance. These simulation experiments verified that the proposed technique was superior in situations where no other bidder was bidding on the combination of goods, that is, other bidders bid independently for each individual good, as well as situations where another bidder did bid on the combination of goods. © 2005 Wiley Periodicals, Inc. Electron Comm Jpn Pt 3, 88(8): 59–67, 2005; Published online in Wiley InterScience (www.interscience.wiley.com). DOI 10.1002/ecjc.20187