Discussion Papers, Department of Finance and Management Science, Norwegian School of Economics (NHH)
No 2005/1:
Reflections about pseudo-dual prices in combinatorial auctions
Andreas Drexl ()
and Kurt Jörnsten ()
Abstract: Combinatorial auctions permitting bids on bundles of items
have been developed to remedy the exposure problem associated with
single-item auctions. Given winning bundle prices a set of item prices is
called market clearing or equilibrium if all the winning (losing) bids are
greater (less) than or equal to the total price of the bundle items.
However, the prices for individual items are not readily computed once the
winner determination problem is solved. This is due to the duality gap of
integer programming caused by the indivisibility of the items. In this
paper we reflect on the calculation of approximate or pseudo-dual item
prices. In particular, we present a novel scheme based on the aggregation
of winning bids. Our analysis is illustrated by means of numerical
examples.
Keywords: Combinatorial auctions; set packing; dual prices; (follow links to similar papers)
JEL-Codes: D44; (follow links to similar papers)
15 pages, May 26, 2005
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