An Experimental Analysis of a Combinatorial Market Mechanism for Bandwidth Trading

We conduct a human experimental and computational simulation investigation of the efficiency properties of a combinatorial double-sided sealed-bid uniform price auction mechanism for allocation of bandwidth over combinations of links to form routes. Two different market structures are used: the benchmark case with valuations over every route combination and the alternative case with buyer valuations only on specific combinations and restricted supply of links. Experimental results show that the mechanism achieves an average of 78% and 87% efficiency in the benchmark and alternative cases respectively. Implementing a naive-bidding strategy in an iterative version of the benchmark case improves efficiency, with bigger improvements as the number of participants increases.