Technical Report 2009-013

Combinatorial and Simultaneous Auction: A Pragmatic Approach to Tighter Bounds on Expected Revenue

Jim Wilenius

May 2009

It is a common belief that combinatorial auctions provide good solutions to resource-allocation in multiple-object markets with synergies. In this work we adopt a pragmatic approach to examining the revenue bounds on combinatorial and simultaneous auctions. The theoretical bounds from our previous work utilize a large number of bidders in order to show that combinatorial auctions yield a higher expected revenue. It is reasonable to believe that the true bounds are much tighter. We argue that this is the indeed the case and that the first-price combinatorial auction is revenue superior even when a relatively small number of bidders participate. The argument is based on three methods. (i) heuristic equilibrium-strategy search, (ii) sampling of the expected revenue in the first-price sealed-bid combinatorial auction, and (iii) a tightened theoretical upper bound on the sealed-bid simultaneous auction in the case of few bidders.

Note: Updated May 28, 2009.

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