Bidding strategies and their impact on revenues in combinatorial auctions

Combinatorial auctions are commonly used for the allocation of discrete, complementary resources. The goal of this research is to shed light onto the critical question of how bidders should bid in combinatorial auctions given that evaluating and submitting all possible bundles is not practical for the bidders and the auctioneer. Within this setting, the research investigates in what constitutes a ‘good bidding strategy’. In particular, a simple and efficient model is proposed for evaluating the value of any bundle, given pairwise synergies, design bidding strategies that efficiently select desirable bundles, and evaluate the performance of different bundling strategies under various market settings. From simulations, several interesting observations are made, one of which suggests that educating bidders is of greater value to the auctioneer than increasing the number of bundles each bidder is allowed to submit.