Introduction to Combinatorial Auctions

Combinatorial auctions are those auctions in which bidders can place bids on combinations of items, called “packages,” rather than just individual items. The study of combinatorial auctions is inherently interdisciplinary. Combinatorial auctions are in the first place auctions, a topic extensively studied by economists. Package bidding brings in operations research, especially techniques from combinatorial optimization and mathematical programming. Finally, computer science is concerned with the expressiveness of various bidding languages, and the algorithmic aspects of the combinatorial problem. The study of combinatorial auctions thus lies at the intersection of economics, operations research, and computer science. In this book, we look at combinatorial auctions from all three perspectives. Indeed, our contribution is to do so in an integrated and comprehensive way. The initial challenge in interdisciplinary research is defining a common language. We have made an effort to use terms consistently throughout the book, with the most common terms defined in the glossary.