Title: The Cost of Simple Bidding in Combinatorial Auctions
Abstract: We study the complexity of bidding optimally in one-shot combinatorial auction mechanisms. Prior work has largely assumed that bidders only submit bids on their bundles of interest. However, we show the surprising result that a single-minded bidder may lose an exponential amount of utility by playing his optimal simple strategy (only bidding on his bundle of interest) compared to playing his optimal complex strategy (which involves bidding on an exponential number of bundles). Our work suggests that it is important for future research on combinatorial auctions to fully take this phenomenon into account. To this effect, we discuss some preliminary ideas about how to minimize the incentives for this kind of strategic manipulation.
