A preference-based, multi-unit auction for pricing and capacity allocation
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Date
2018-03-01
Authors
Lessan, Javad
Karabati, Selcuk
Journal Title
Journal ISSN
Volume Title
Publisher
Elsevier
Abstract
We study a pricing and allocation problem of a seller of multiple units of a homogeneous item, and present a semi-market mechanism in the form of an iterative ascending-bid auction. The auction elicits buyers' preferences over a set of options offered by the seller, and processes them with a random-priority assignment scheme to address buyers' "fairness" expectations. The auction's termination criterion is derived from a mixed-integer programming formulation of the preference-based capacity allocation problem. We show that the random priority- and preference-based assignment policy is a universally truthful mechanism which can also achieve a Pareto-efficient Nash equilibrium. Computational results demonstrate that the auction mechanism can extract a substantial portion of the centralized system's profit, indicating its effectiveness for a seller who needs to operate under the "fairness" constraint.
Description
The final publication is available at Elsevier via https://dx.doi.org/10.1016/j.cor.2017.09.024 © 2018. This manuscript version is made available under the CC-BY-NC-ND 4.0 license https://creativecommons.org/licenses/by-nc-nd/4.0/
Keywords
Multi-unit auctions, Pricing and capacity allocation, Mixed-integer programming