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Valuation compressions in VCG-based combinatorial auctions

Dütting, Paul, Henzinger, Monika and Starnberger, Martin (2018) Valuation compressions in VCG-based combinatorial auctions. ACM Transactions on Economics and Computation. ISSN 2167-8375

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Abstract

The focus of classic mechanism design has been on truthful direct-revelation mechanisms. In the context of combinatorial auctions the truthful direct-revelation mechanism that maximizes social welfare is the VCG mechanism. For many valuation spaces computing the allocation and payments of the VCG mechanism, however, is a computationally hard problem. We thus study the performance of the VCG mechanism when bidders are forced to choose bids from a subspace of the valuation space for which the VCG outcome can be computed efficiently. We prove improved upper bounds on the welfare loss for restrictions to additive bids and upper and lower bounds for restrictions to non-additive bids. These bounds show that increased expressiveness can give rise to additional equilibria of poorer efficiency.

Item Type: Article
Official URL: https://teac.acm.org/
Additional Information: © ACM 2018
Divisions: Government
Subjects: H Social Sciences > HB Economic Theory
Sets: Departments > Government
Date Deposited: 11 Apr 2018 11:26
Last Modified: 20 Oct 2019 00:09
Projects: ICT10-002, IK I049-N
Funders: Swiss National Science Foundation, Vienna Science and Technology Fund, University of Vienna
URI: http://eprints.lse.ac.uk/id/eprint/87419

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