A Double-Sided Multiunit Combinatorial Auction for Substitutes: Theory and Algorithms

Combinatorial exchanges have existed for a long time in securities markets. In these auctions buyers and sellers can place orders on combinations, or bundles of different securities. These orders are conjunctive: they are matched only if the full bundle is available. On business-to-business (B2B) exchanges, buyers have the choice to receive the same product with different attributes; for instance the same product can be produced by different sellers. A buyer indicates his preference by submitting a disjunctive order, where he specifies how much of the product he wants, and how much he values each attribute. Only the goods with the best attributes and prices will be matched. This article considers a doubled-sided multi-unit combinatorial auction for substitutes, that is, a uniform price auction where buyers and sellers place both types of orders, conjunctive and disjunctive. We prove the existence of a linear price which is both competitive and surplus-maximizing when goods are perfectly divisible, and nearly so otherwise. We describe an algorithm to clear the market, which is particularly efficient when the number of traders is large.Combinatorial auction, economic equilibrium

Overweight Vehicle Permitting Alternatives

Overweight vehicles exceed the federal and/or state statutory limits for either the gross vehicle weight (GVW) or the weight of individual axles or axle groups. National and state limits on vehicle weights were established to preserve the highway infrastructure. Past research has shown that overweight operations, while causing significant damage to roads and bridges, can enhance the trucking industry productivity, and thus yield economic benefits both regionally and nationally. In the United States, individual states administer oversize and overweight vehicle permit programs to regulate and collect revenues from overweight operations. Differences in the truck size and weight limits and overweight permit programs across the states inhibit seamless and efficient truck travel across the country. Agencies responsible for maintaining the highway infrastructure realize that the cost of consumption of the infrastructure far exceeds the collected revenues. The current study examines four options to improve overweight vehicle permitting systems: multiobjective optimization of traditional mechanisms, incentives for infrastructure-friendly vehicles, application of an auction-based quota for overweight vehicle operations, and opportunities for harmonizing the regulations covering overweight vehicle operations that differ across the states. The first three options are qualitatively and quantitatively applied to a case study involving Indiana\u27s newly-established overweight commodity permits for vehicles carrying metal (up to 120,000 lbs), and agricultural (up to 97,000 lbs) goods. An incremental approach to harmonization of truck size and weight regulations and overweight vehicle permitting systems is qualitatively described, including available tools and data needs to promote harmonization. The four options are not mutually exclusive; collectively, they provide opportunities for transportation decision makers to improve overweight vehicle permitting. Each option contributes to the ongoing discussion about how to address the issue of uncompensated consumption of highway infrastructure assets attributable to overweight vehicles. The multiobjective optimization formulated herein better reflects actual decisions made by both the agency and carriers than limited previous quantitative research. The quantification of willingness to pay for investment informs state agencies about the extent to which incentives for infrastructure-friendly vehicles can be adopted. The quota framework contained herein is an extension of strategies used previously to mitigate demand into a tool for controlling the amount of allowable infrastructure damage while collecting necessary revenues to protect infrastructure from undue damage. Finally, the harmonization of overweight vehicle permitting programs can streamline interstate overweight operations for both state agencies and carriers. The combination of several options can result in greater improvements to both the trucking industry\u27s productivity and the preservation of highway infrastructure than any option alone

Advances in Negotiation Theory: Bargaining, Coalitions and Fairness

Bargaining is ubiquitous in real-life. It is a major dimension of political and business activities. It appears at the international level, when governments negotiate on matters ranging from economic issues (such as the removal of trade barriers), to global security (such as fighting against terrorism) to environmental and related issues (e.g. climate change control). What factors determine the outcome of negotiations such as those mentioned above? What strategies can help reach an agreement? How should the parties involved divide the gains from cooperation? With whom will one make alliances? This paper addresses these questions by focusing on a non-cooperative approach to negotiations, which is particularly relevant for the study of international negotiations. By reviewing non-cooperative bargaining theory, non-cooperative coalition theory, and the theory of fair division, this paper will try to identify the connection among these different facets of the same problem in an attempt to facilitate the progress towards a unified framework.Negotiation theory, Bargaining, Coalitions, Fairness, Agreements

Modeling ‘No-choice’ Responses in Attribute Based Valuation Surveys

We examine the impact of providing a ‘no-choice’ option in an attribute based valuation experiment. The aim of the experiment was to assess monetary values of cockle fishery management practices in the Dutch Wadden Sea for different stakeholder groups, namely Dutch citizens, local residents, and tourists. The current policy debate about the management of the Wadden Sea stresses the fact that individual preferences with respect to cockle-fishery differ. The aim of this paper is to analyze the individual preferences in an objective way. Special attention is given to the influence of including a ‘no-choice option’, which is analyzed using a nested logit model. We test whether the full set of policy options can be considered as close substitutes. The estimation results show that the influence of including the no choice option differs among the stakeholders considered.Stakeholder valuation, Stated choice method, Multinomial logit model, Binary logit model

Coalition Formation and Combinatorial Auctions; Applications to Self-organization and Self-management in Utility Computing

In this paper we propose a two-stage protocol for resource management in a hierarchically organized cloud. The first stage exploits spatial locality for the formation of coalitions of supply agents; the second stage, a combinatorial auction, is based on a modified proxy-based clock algorithm and has two phases, a clock phase and a proxy phase. The clock phase supports price discovery; in the second phase a proxy conducts multiple rounds of a combinatorial auction for the package of services requested by each client. The protocol strikes a balance between low-cost services for cloud clients and a decent profit for the service providers. We also report the results of an empirical investigation of the combinatorial auction stage of the protocol.Comment: 14 page

Equilibrium in Scoring Auctions

This paper studies multi-attribute auctions in which a buyer seeks to procure a complex good and evaluate offers using a quasi-linear scoring rule. Suppliers have private information about their costs, which is summarized by a multi-dimensional type. The scoring rule reduces the multidimensional bids submitted by each supplier to a single dimension, the score, which is used for deciding on the allocation and the resulting contractual obligation. We exploit this idea and obtain two kinds of results. First, we characterize the set of equilibria in quasi-linear scoring auctions with multi-dimensional types. In particular, we show that there exists a mapping between the class of equilibria in these scoring auctions and those in standard single object IPV auctions. Second, we prove a new expected utility equivalence theorem for quasi-linear scoring auctions.Auctions, Procurement

Auctions, Bidding and Exchange Design

The different auction types are outlined using a classification framework along six dimensions. The economic properties that are desired in the design of auction mechanisms and the complexities that arise in their implementation are discussed. Some of the most interesting designs from the literature are analyzed in detail to establish known results and to identify the emerging research directions.Engineering and Applied Science

Agri-Environmental Policies in a Transition Economy: Using a Choice Experiment to Value Agricultural Biodiversity on Hungarian Small Farms

Agricultural biodiversity is a crucial environmental resource. Much of the agricultural biodiversity remaining today is found on the semi-subsistence farms of poorer countries and on the small-scale farms and home gardens of more industrialised nations. The traditional Hungarian home gardens, which serve as small farms, are an example. Historically, these home gardens have served important functions related to food security, diet quality, and local culture. Some policies related to European Union accession threaten the survival of traditional home gardens in Hungary’s transitional economy. This paper applies the choice experiment method to estimate the value farmers themselves attach to the agricultural biodiversity still found in these micro-agroecosystems. One of several related studies, its aim is to enhance policy understanding of the role of Hungarian small farms and home gardens in the National Agri-Environmental Programme. The analysis is based on primary data collected in three environmentally sensitive areas of Hungary where pilot agri-environmental programmes have been initiated. Findings demonstrate the variation in values farmers assign to home gardens across regions and households, with implications for the design of efficient public conservation programmes.Agricultural biodiversity, Conservation, Choice experiment method, Hungary, Home garden

Comparing Individual-Specific Benefit Estimates for Public Goods: Finite Versus Continuous Mixing in Logit Models

Multi-attribute stated preference data, derived through choice experiments, is used to investigate the consequence of a finite number of preference groups in a sample of Yorkshire Water residential customers on the conditional distributions of willingness to pay in the sample. The research focuses on ‘public good’ values, and retrieves the implicit customer specific welfare measures conditional on a sequence of four observed choices. We assess and contrast the sample evidence for the presence of a finite number of 2, 3, 4 and 5 latent preference groups (classes), and contrast these with the presence of a continuous distribution of parameter estimates using mixed logit models. The main focus is the conditional valuations in the form of marginal values for the consequence of waste water handling and treatment, namely: river water quality, area flooding by sewage, presence of odour and flies, and other water related amenities.Choice experiments, Mixed logit, Latent classes, Individual-specific estimates, Non-market valuation

Uniform price auction of divisible goods based on multiple rounds linear bidding and its equilibrium analysis

In this paper, the auction problem of a kind of continuous homogeneous divisible goods is studied and a uniform price auction mechanism is presented based on three conditions, i.e. the auctioneer’s supply is variable, every bidder submits multiple rounds continuous linear bidding, and every bidder’s valuation to per unit of the goods is independent private information. Concretely, two key problems, i.e. the bidders’ asymptotic strategic behaviours and forming process and composition of equilibrium points are explored. The conclusion is drawn that different bidders’ bidding order and different starting points of initial bidding would not cause different local equilibrium points, and if the equilibrium points exist, then the equilibrium point is unique. First published online: 09 Jun 201