Equilibrium Prices in Bundle Auctions

Peter R. Wurman and Michael P. Wellman

The allocation of discrete, complementary resources is a fundamental problem in economics and of direct interest to e-commerce applications. In this paper we establish that competitive equilibrium bundle prices always exist that support the efficient allocation in discrete resource allocation problems with free disposal. We believe that this is an important step in the quest for a mechanism that performs well in the face of complementary preferences. We present a family of auctions that use this bundle pricing policy, and make some initial observations on several of its members, including the new Ascending k-Bundle auction.

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