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Price-based online mechanisms for settings with uncertain future procurement costs and multi-unit demand

Price-based online mechanisms for settings with uncertain future procurement costs and multi-unit demand
Price-based online mechanisms for settings with uncertain future procurement costs and multi-unit demand
We examine the use of online mechanism design in settings where consumers have multi-unit demand, goods are procured and allocated over time, and future procurement costs are uncertain and only become known at the time of allocation. An important application with such characteristics is demand response, where electricity wholesale prices depend on overall demand and the availability of renewables. We formulate this as a mechanism design problem and focus specifically on the property that the mechanism does not revoke any allocated items. In this setting, we characterise a class of price-based mechanisms that guarantee dominant-strategy incentive compatibility, individual rationality, and no cancellation. We present three specific such mechanisms in this domain and evaluate them in an electric vehicle charging setting. By using extensive numerical simulations, we show that a mechanism based on the first-come first-served principle performs well in settings where future procurement costs can be estimated reliably or supply is very tight, while a responsive mechanism performs very well when the estimated procurement costs are highly uncertain and supply is not as tight. We moreover show that a well-defined price-based mechanism can lead to high profits for the operator of the mechanism in many real-world situations.
309-317
ACM
Hayakawa, Keiichiro
29e1e6b7-c964-44c2-85be-e4495188032b
Gerding, Enrico
d9e92ee5-1a8c-4467-a689-8363e7743362
Stein, Sebastian
cb2325e7-5e63-475e-8a69-9db2dfbdb00b
Shiga, Takahiro
bf654efd-51e9-4b6e-8f06-8158d27135a4
Hayakawa, Keiichiro
29e1e6b7-c964-44c2-85be-e4495188032b
Gerding, Enrico
d9e92ee5-1a8c-4467-a689-8363e7743362
Stein, Sebastian
cb2325e7-5e63-475e-8a69-9db2dfbdb00b
Shiga, Takahiro
bf654efd-51e9-4b6e-8f06-8158d27135a4

Hayakawa, Keiichiro, Gerding, Enrico, Stein, Sebastian and Shiga, Takahiro (2018) Price-based online mechanisms for settings with uncertain future procurement costs and multi-unit demand. In 17th International Conference on Autonomous Agents and Multiagent Systems (AAMAS 2018). ACM. pp. 309-317 . (In Press)

Record type: Conference or Workshop Item (Paper)

Abstract

We examine the use of online mechanism design in settings where consumers have multi-unit demand, goods are procured and allocated over time, and future procurement costs are uncertain and only become known at the time of allocation. An important application with such characteristics is demand response, where electricity wholesale prices depend on overall demand and the availability of renewables. We formulate this as a mechanism design problem and focus specifically on the property that the mechanism does not revoke any allocated items. In this setting, we characterise a class of price-based mechanisms that guarantee dominant-strategy incentive compatibility, individual rationality, and no cancellation. We present three specific such mechanisms in this domain and evaluate them in an electric vehicle charging setting. By using extensive numerical simulations, we show that a mechanism based on the first-come first-served principle performs well in settings where future procurement costs can be estimated reliably or supply is very tight, while a responsive mechanism performs very well when the estimated procurement costs are highly uncertain and supply is not as tight. We moreover show that a well-defined price-based mechanism can lead to high profits for the operator of the mechanism in many real-world situations.

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Accepted/In Press date: 24 January 2018
Venue - Dates: 17th International Conference on Autonomous Agents and Multiagent Systems, Stockholm, Sweden, 2018-07-11 - 2018-07-13

Identifiers

Local EPrints ID: 417793
URI: https://eprints.soton.ac.uk/id/eprint/417793
PURE UUID: b2c29d1d-8c32-410a-a9db-6b5a4cf1cb10
ORCID for Enrico Gerding: ORCID iD orcid.org/0000-0001-7200-552X

Catalogue record

Date deposited: 14 Feb 2018 17:30
Last modified: 07 Jun 2019 00:34

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