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Socially-Efficient Mechanisms for Combinatorial Double Auction
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Abstract

We present a mechanism for double auction with multiple item types. Each buyer/seller may buy/sell several different items. The traders may have non-additive valuations over the items, as long as the valuations are gross-substitues (no complementarities). Our mechanism is individually-rational, incentive-compatible with high probability (defined formally in the paper), prior-free and strongly budget-balanced, which means that the auctioneer neither loses nor gains any money. Thus, all gain-from-trade remains with the traders, and the social welfare is asymptotically optimal from the traders’ perspective. In addition, for the simpler scenario in which all items are identical (the multi-unit setting), the mechanism is dominant strategy truthful and achieves improved social welfare.