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Bundling equilibrium in combinatorial auctions. (English) Zbl 1077.91023
Summary: This paper analyzes ex post equilibria in the VCG combinatorial auctions. If \(\Sigma\) is a family of bundles of goods, the organizer may restrict the bundles on which the participants submit bids, and the bundles allocated to them, to be in \(\Sigma\). The \(\Sigma\)-VCG combinatorial auctions obtained in this way are known to be truth-telling mechanisms. In contrast, this paper deals with non-restricted VCG auctions, in which the buyers choose strategies that involve bidding only on bundles in \(\Sigma\), and these strategies form an equilibrium. We fully characterize those \(\Sigma\) that induce an equilibrium in every VCG auction, and we refer to the associated equilibrium as a bundling equilibrium. The main motivation for studying all these equilibria, and not just the domination equilibrium, is that they afford a reduction of the communication complexity. We analyze the tradeoff between communication complexity and economic efficiency of bundling equilibrium.

MSC:
91B26 Auctions, bargaining, bidding and selling, and other market models
Software:
CABOB
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