The dining bidder problem

Abstract

Item bidding auctions are a line of research which provides a simple and often efficient alternative to traditional combinatorial auction design - in particular, they were inspired by real world auction houses, like eBay and Sotheby's. We survey the literature from a culinary perspective, offering an intuitive illustration of the welfare in simultaneous and sequential auctions. Welfare in simultaneous first and second price auctions is high when bidders have complement-free valuations. In contrast, sequential second price auctions can lead to bad outcomes due to signaling problems and even in the case of first price, a good outcome is only guaranteed for unit demand bidders. We give an intuitive interpretation of an example with bad welfare in sequential first price auctions with submodular bidders from Paes Leme, Syrgkanis and Tardos (SODA'12).