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Revenue monotonicity in combinatorial auctions

Revenue monotonicity in combinatorial auctions
Revenue monotonicity in combinatorial auctions
In recent work [Rastegari et al. 2007a; 2007b] we study revenue properties of combinatorial auctions. Consider a well-known drawback of the famous VCG mechanism: a seller’s revenue can go down when bidders are added to an auction, contrary to the intuition that having more bidders should increase competition. Following an example due to Ausubel and Milgrom [2006], consider an auction with three bidders and two goods for sale. Suppose that bidder 2 wants both goods for the price of $2 billion whereas bidder 1 and bidder 3 are willing to pay $2 billion for the first and the second good respectively (see Figure 1). The VCG mechanism awards the goods to bidders 1 and 3 for the price of zero, yielding the seller zero revenue. However, in the absence of either bidder 1 or bidder 3, the revenue of the auction would be $2 billion.

We say that an auction mechanism is revenue monotonic if the seller’s revenue is …
0004-3702
45-47
Rastegari, Baharak
6ba9e93c-53ba-4090-8f77-c1cb1568d7d1
Condon, Anne
a1c1e645-b4b0-4449-a18e-6e43a440cce8
Leyton-Brown, Kevin
bbf18b1f-b857-48b6-b33c-5b26a6ed6b13
Rastegari, Baharak
6ba9e93c-53ba-4090-8f77-c1cb1568d7d1
Condon, Anne
a1c1e645-b4b0-4449-a18e-6e43a440cce8
Leyton-Brown, Kevin
bbf18b1f-b857-48b6-b33c-5b26a6ed6b13

Rastegari, Baharak, Condon, Anne and Leyton-Brown, Kevin (2007) Revenue monotonicity in combinatorial auctions. Artificial Intelligence, 175 (2), 45-47.

Record type: Article

Abstract

In recent work [Rastegari et al. 2007a; 2007b] we study revenue properties of combinatorial auctions. Consider a well-known drawback of the famous VCG mechanism: a seller’s revenue can go down when bidders are added to an auction, contrary to the intuition that having more bidders should increase competition. Following an example due to Ausubel and Milgrom [2006], consider an auction with three bidders and two goods for sale. Suppose that bidder 2 wants both goods for the price of $2 billion whereas bidder 1 and bidder 3 are willing to pay $2 billion for the first and the second good respectively (see Figure 1). The VCG mechanism awards the goods to bidders 1 and 3 for the price of zero, yielding the seller zero revenue. However, in the absence of either bidder 1 or bidder 3, the revenue of the auction would be $2 billion.

We say that an auction mechanism is revenue monotonic if the seller’s revenue is …

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Published date: 1 December 2007

Identifiers

Local EPrints ID: 426396
URI: https://eprints.soton.ac.uk/id/eprint/426396
ISSN: 0004-3702
PURE UUID: 064f06a2-c0d5-492b-9fa7-30a0974504c5
ORCID for Baharak Rastegari: ORCID iD orcid.org/0000-0002-0985-573X

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Date deposited: 27 Nov 2018 17:30
Last modified: 03 Dec 2019 01:22

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Contributors

Author: Baharak Rastegari ORCID iD
Author: Anne Condon
Author: Kevin Leyton-Brown

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