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Tatonnement Mechanisms for Combinatorial Exchanges

Biswas, S and Narahari, Y (2010) Tatonnement Mechanisms for Combinatorial Exchanges. In: Commerce and Enterprise Computing (CEC), 2010 IEEE 12th Conference on , 10-12 Nov. 2010, Shanghai.

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Combinatorial exchanges are double sided marketplaces with multiple sellers and multiple buyers trading with the help of combinatorial bids. The allocation and other associated problems in such exchanges are known to be among the hardest to solve among all economic mechanisms. It has been shown that the problems of surplus maximization or volume maximization in combinatorial exchanges are inapproximable even with free disposal. In this paper, the surplus maximization problem is formulated as an integer linear programming problem and we propose a Lagrangian relaxation based heuristic to find a near optimal solution. We develop computationally efficient tâtonnement mechanisms for clearing combinatorial exchanges where the Lagrangian multipliers can be interpreted as the prices of the items set by the exchange in each iteration. Our mechanisms satisfy Individual-rationality and Budget-nonnegativity properties. The computational experiments performed on representative data sets show that the proposed heuristic produces a feasible solution with negligible optimality gap.

Item Type: Conference Paper
Publisher: IEEE
Additional Information: Copyright 2010 IEEE. Personal use of this material is permitted.However, permission to reprint/republish this material for advertising or promotional purposes or for creating new collective works for resale or redistribution to servers or lists, or to reuse any copyrighted component of this work in other works must be obtained from the IEEE.
Department/Centre: Division of Electrical Sciences > Computer Science & Automation
Date Deposited: 01 Aug 2011 07:24
Last Modified: 02 Aug 2011 08:11
URI: http://eprints.iisc.ac.in/id/eprint/39122

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