An Analysis of Design Problems in Combinatorial Procurement Auctions

Abstract

This paper, selected for the category "Best papers from 1959 to 2008", was first published in WIRTSCHAFTSINFORMATIK 47(2)2005:126-134. Combinatorial auctions are promising auction formats for industrial and public procurement. Potential advantages of using combinatorial auctions include lower overall spend, low transaction costs for multi-item negotiations, fairness and market transparency for suppliers as well as high allocative efficiency. A number of fundamental design considerations are relevant to the application of combinatorial auctions in procurement. In addition, procurement specialists need to consider several domain-specific requirements, such as additional side constraints as well as alternative multidimensional bid types.

Accelerating Combinatorial Clock Auctions Using Bid Ranges

“…Efficiency is strictly distinguished from auction revenues. Another common objective is Incentive Compatibility where truth revelation of valuations is optimal for the bidders [7].…”

Combinatorial auctions in public procurement: Experiences from sweden

“…Although there is a rather large amount of literature on combinatorial auctions, the number of empirical studies on combinatorial procurement auctions is relatively limited. The reason is that this type of auction mechanism is scarcely applied in public procurement today, albeit being increasingly and successfully used in industrial procurement (see Bichler et al [2009]) for a review of some previous empirical studies). Therefore, very little is empirically investigated as to what extent suppliers use the option to submit bids on packages, the size of the packages and the size of the discounts.…”

Course Allocation via Stable Matching

“…The Nobel Memorial Prize in Economic Science in 2012 was awarded to Alvin E. Roth and Lloyd S. Shapley for "the theory of stable allocations and the practice of market design" as the Royal Swedish Academy of Sciences put it. Market design is an academic field at the intersection of computer science, economics, and the management sciences, concerned with the design of market institutions (Roth 2002;Milgrom 2011), with many recent contributions from the Information Systems community (for example Weinhardt et al 2003;Bapna et al 2004;Bichler et al 2009).…”