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An Expressive Mechanism for Auctions on the Web.

Abstract

Auctions are widely used on the Web. Applications range from internet advertising to platforms such as eBay. In most of these applications the auctions in use are single/multi-item auctions with unit demand. The main drawback of standard mechanisms for this type of auctions, such as VCG and GSP, is the limited expressiveness that they offer to the bidders. The General Auction Mechanism (GAM) of [1] is taking a first step towards addressing the problem of limited expressiveness by computing a bidder optimal, envy free outcome for linear utility functions with identical slopes and a single discontinuity per bidder-item pair. We show that in many practical situations this does not suffice to adequately model the preferences of the bidders, and we overcome this problem by presenting the first mechanism for piece-wise linear utility functions with non-identical slopes and multiple discontinuities. Our mechanism runs in polynomial time. Like GAM it is incentive compatible for inputs that fulfill a certain non-degeneracy requirement, but our requirement is more general than the requirement of GAM. For discontinuous utility functions that are non-degenerate as well as for continuous utility functions the outcome of our mechanism is a competitive equilibrium. We also show how our mechanism can be used to compute approximately bidder optimal, envy free outcomes for a general class of continuous utility functions via piece-wise linear approximation. Finally, we prove hardness results for even more expressive settings.

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Authors
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Citation
Category
Paper in Conference Proceedings or in Workshop Proceedings (Paper)
Event Title
Proc. 20th IW3C2 International World Wide Web Conference (WWW)
Divisions
Theory and Applications of Algorithms
Event Location
HICC Hyderabad, India
Event Type
Conference
Event Dates
March 28 - April 1, 2011
Publisher
ACM
Page Range
pp. 127-136
Date
01 April 2011
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