Applying Large-Scale Multi-unit Combinatorial Auctions with Reserve-Price Biddings for Resource Allocations -- A Preliminary Analysis

Abstract

An auction-based pricing mechanism has been presented to be applied for the problems that can be modeled as a variant of reserve price biddings on combinatorial auctions. In there, the combinatorial auction is extended to cover a multi-unit scenario, which allows placing bids for indistinguishable items to cover the case, for example, to assign an allocation of electricity power usage for services, considering electricity generation costs on the power suppliers. Although such a mechanism could be naively applied to various purposed such as dynamic electricity auctions, it was difficult to be applied for large-scale auction problems due to its computational intractability and theoretical limitations. In this paper, a preliminary analysis for an extended pricing mechanism is presented. The mechanism employs an approximate allocation and pricing algorithm that is capable to handle multi-unit auctions with reserve price biddings, guaranteeing the reserve price condition. The presented preliminary analysis shows the approach efficiently produces approximation allocations that are also necessary in its pricing process and it behaves as an approximation of VCG (Vickrey-Clarke-Groves) mechanism satisfying budget balance condition and bidders' individual rationality without having single-minded bidders assumption.