Combinatorial Auctions
n Auctioneer sells a set of non-homogeneous items
n Bidders often have complex valuations
n complementarities
e.g. V(TV & VCR) > V(TV) + V(VCR)
n substitutabilities
V(TV1 & TV2) < V(TV1) + V(TV2)
n Solution: allow bids on bundles of goods
n achieves a higher revenue and social welfare than
separate auctions
n Two hard problems:
n Expressing valuations
n Determining optimal allocation