Incompletely Specified Combinatorial Auctions

The popularity of auctions has increased dramatically with their introduction on the Internet. This migration has provided a unique opportunity to harness the power of computing to create new auction forms that were previously impossible. We describe a new type of combinatorial auction that accepts incompletely specified bids that provide a framework to guide, rather than dictate, the choice of goods that satisfy bidder needs. Allowing a bid in the form of high-level rules relieves the buyer from the burden of enumerating all possible acceptable bundles. The mechanism is designed to accommodate the potentially large and often complex problems commonly relegated to negotiated sales. The allocation of goods requires solving a complex combinatorial problem a task that is completely impractical in a conventional auction setting. We show how computing resources in an online auction make rule-based bids not only feasible but also attractive for developing innovative auction mechanisms. As expected, the proposed model becomes computationally intractable as the number of bidders increases; therefore, we present and study simplifying heuristics to make large problems of this nature manageable. We