Matrix bids in combinatorial auctions: expressiveness and micro-economic properties

Abstract

A combinatorial auction is an auction where multiple items are for sale simultaneously to a set of buyers. Furthermore, buyers are allowed to place bids on subsets of the available items. This paper focuses on a combinatorial auction where a bidder can express his preferences by means of a so-called ordered matrix bid. Ordered matrix bids are a bidding language that allows a compact representation of a bidder''s preferences, and was developed by Day (2004). We give an overview of how a combinatorial auction with matrix bids works. We elaborate on the relevance of the matrix bid auction and we develop methods to verify whether a given matrix bid satisfies properties related to micro-economic theory as free disposal, subadditivity, submodularity and the gross substitutes property. Finally, we investigate how a collection of arbitrary bids can be represented as a matrix bid.microeconomics ;