Adaptive bidding in combinatorial auctions in dynamic markets

Abstract

Combinatorial auction, where bidders can bid on bundles of items, has been the subject of increasing interest in recent years. Although much research work has been conducted on combinatorial auctions, most has been focusing on the winner determination problem. A largely unexplored area of research in combinatorial auctions is the design of bidding strategies, in particular, those that can be used in open and dynamic markets in which market situation is generally constantly changing. Obviously, a good bidding strategy to be used in such realistic markets cannot be obtained by analytical methods, which require all market information be known before a solution can possibly be found. Machine learning based approaches are not completely appropriate, either, as an optimal strategy learned from one market generally no longer perform well when the market situation changes. In this paper, we propose a new adaptive bidding strategy for combinatorial auctionbased resource allocation problem in such dynamic markets. A bidder adopting this strategy constantly perceives the market situation, and adaptively reviews and adjusts his bid determination, thus responding to the dynamic market in a timely manner. Experiment results show that agents adopting this adaptive bidding strategy perform very well, even without any prior knowledge about the market.