Article ID: | iaor200810 |
Country: | Netherlands |
Volume: | 42 |
Issue: | 2 |
Start Page Number: | 958 |
End Page Number: | 974 |
Publication Date: | Nov 2006 |
Journal: | Decision Support Systems |
Authors: | Jones Joni L., Andrews Richard W. |
Keywords: | artificial intelligence: decision support |
Considerable research discusses the advantages and disadvantages of combinatorial auctions. This study addresses a disadvantage, the loss of price discovery for the individual items sold as bundles. Prior studies confirm that there may not be a unique unit-level equilibrium price. We claim a distribution of prices satisfy a given allocation and describe a technique to determine these distributions. Gibbs Sampling allows us to discover characteristics of combinatorial auctions based on the allocated bids. We extract the market-influenced unit-level price, bidder profit, reservation discount distributions and are able to find patterns that depict synergies between products. The posterior distribution provides insights useful to managerial decision making.