Rank-Guaranteed Auctions

TL;DR

This paper introduces a rank-guaranteed combinatorial ascending auction that ensures near-optimal revenue with minimal rationality, robust to uncertainties, and emphasizes the importance of menu design in auction performance.

Contribution

It proposes a novel rank-guaranteed auction mechanism that is approximately optimal and robust, with a focus on simple menu design in combinatorial auctions.

Findings

The auction guarantees revenue at least as high as the (|M|+1)th-highest valuation.

Simple, approximately optimal menus are provided for various settings.

The design of menus is crucial for auction optimality and robustness.

Abstract

We propose a combinatorial ascending auction that is "approximately" optimal, requiring minimal rationality to achieve this level of optimality, and is robust to strategic and distributional uncertainties. Specifically, the auction is rank-guaranteed, meaning that for any menu M and any valuation profile, the ex-post revenue is guaranteed to be at least as high as the highest revenue achievable from feasible allocations, taking the (|M|+ 1)th-highest valuation for each bundle as the price. Our analysis highlights a crucial aspect of combinatorial auction design, namely, the design of menus. We provide simple and approximately optimal menus in various settings.