Choosing a Combinatorial Auction Design: An Illustrated Example

This paper summarizes a talk given in honor of Saul Gass’ 80 Birthday celebration. The paper is modeled after Saul’s well-known book An Illustrated Guide to Linear Programming and presents some of the illustrations provided during that talk. In this paper, we explain why specific rules might be chosen within a general combinatorial auction framework. The purpose of such rules is to assure that the market mechanism is fair to both buyers and sellers and so that the auction will end in an efficient outcome, i.e. the goods are won by those that value them the most. The paper describes some of the issues, both computational and economic, that one faces when designing such auctions.