Designing Proxy Bidders for Online Combinatorial Auctions

The last few years have witnessed a high rate of growth in revenue from single-item online auctions popularized by eBay and similar Websites. But implementations of online combinatorial auctions are rare because of the high cost incurred by the seller in solving the WDP, and the high participation and monitoring costs that have to be borne by the bidders. Recently, an incremental dynamic programming formulation for the WDP has made this problem more tractable when the number of items is not too large. In an effort to ease the burden of the bidder, we propose the use of a proxy agent that will bid on the bidder´s behalf. In our algorithmic scheme, PRACA, a main process coordinates the activities of a number of autonomous proxy agents, one for each bidder, by means of signals. We derive some interesting theoretical results, and describe how we verified the operational correctness of PRACA.