Discovering Equilibrium Strategies for a Combinatorial First Price Auction

In this paper, the unresolved and fundamental strategy problem of the first price single round sealed bid combinatorial auction is addressed. As a step toward discovering equilibrium strategies, a new heuristic based on simple and intuitive methods is presented. The heuristic is evaluated using two different independently and uniformly distributed valuation models, one very general model where bidders bid on all combinations and one restricted model where bidders bid on one specific combination and single bids on the remaining items. Results yield natural explainable strategies with good characteristics based on comparisons of payoff, revenue and allocative efficiency.