CAWP
A Combinatorial Auction Web Platform
İbrahim Cereci and Hürevren Kılıç
Computer Engineering Department, Atılım University, İncek, Ankara, Turkey
Keywords: Online Auctions, Combinatorial Auctions, e-Commerce, Winner Determination Problem.
Abstract: Online auctions, including online Combinatorial Auctions, are important examples of e-commerce
applications. In this paper, a Combinatorial Auction Web Platform (CAWP) is introduced. The platform
enables both product selling and buying capabilities that can be realized in a combinatorial way. CAWP
supports a Sealed-Bid Single-Unit type of Combinatorial Auctions. Easy customization for any selected
problem domain is a distinguished feature of CAWP. Platform users are not expected to have any technical
knowledge about how to solve the Winner Determination Problem (WDP) known to be critical for profit
maximization of the auctioneers in Combinatorial Auctions.
1 INTRODUCTION
Auction is a trading process where auctioneer
provides goods or services and buyer bids to these
goods or services. At the end, the highest bidder
wins. Online auctions are the auctions which are
held over the internet. Rapid growth of internet
makes online auctioning important, as it reduces the
time and space cost of the offline auctioning
mechanisms. Combinatorial Auctions (CA) are the
auctions that bidders place bids on combinations of
items rather than a single item (Vries and Vohra,
2010). CAs are commonly used in application areas
like transportation (Kwon et.al., 2005), bus routes,
airport landing rights, power exchanges, carbon
permits, and radio spectrum for wireless
communications services (Milgrom, 2000) For
example, in 2002, Nigeria sold regional fixed
wireless access licenses on a sealed-bid
combinatorial auction (Koboldt et.al., 2003).
Similarly, allocation of web services via CAs is
possible. The requirement of more than one web
services to be elaborated at the same time implies a
form of bidding that supports web services
combinations (Lin et.al., 2008). CAs also used in
Supply Chain Formation. The supply chain
formation demands difficult coordination issues for
distributed negotiation of the protocols to be solved.
Parties must negotiate for multi level production
relationships with important interdependencies
among inputs and outputs of each level. CAs
addresses this problem by global optimization over
expressed offers to engage in compound exchanges
(Walsh et.al., 2000).
In practice, CAs are popular because they give
bidders a capability to express their complete
preferences. Especially, if the items in the auction
are complementary, set of items may be valued as
more than the sum of values for each individual
item. At the same time, the auctioneer may obtain
higher benefit by initiating a CA instance. This is
because of allowing bidders to express their
preferences in combinatorial way, which may results
in better auction revenues (Cramton et.al., 2007).
Automation of the CA is clearly important, because
sellers may want to maximize their revenues and let
their bidders flexibly express their preferences while
bidding for the items in the auction over the internet.
One of the main problems for the auctioneer in
an online CA is to decide about which bid(s) will be
allocated (or chosen as the winner(s)). CA allows
bidder to bid bundles of items in an auction while
these bundles may overlap. The aim is to find a
subset of all given bids that will maximize the
resulting revenue of the seller. In literature, this
problem is called as Winner Determination Problem
(WDP) known to be NP-complete (Gottlob and
Greco, 2007). Online CAs cannot perform well for
the unbounded large scale problems. But with giving
limitation to maximum number of items in an
auction, problem size can be reduced to a solvable
instances. To the best of author’s knowledge, there
82
Cereci Ä
ˇ
r. and Kılıç H. (2010).
CAWP - A Combinatorial Auction Web Platform.
In Proceedings of the International Conference on e-Business, pages 82-88
DOI: 10.5220/0002998200820088
Copyright
c
SciTePress
is no CA platform realizing Consumer to Consumer
(C2C) auctions. In this paper, an online configurable
Combinatorial Auction Web Platform (CAWP) is
introduced (Cereci, 2009). The platform can be used
by consumers who want to sell or buy goods in a
combinatorial way. Basically, the consumers are not
required to know the details about how to solve the
WDP. CAWP is developed by using open source
tools and technologies. It is operating system
independent. The sellers and buyers can interact
with the system through a simple web browser
without any additional program installation.
The rest of the paper has the following
organization. In Section 2, a background information
about general auctions and their automation are
provided. In Section 3, combinatorial auctions and
the winner determination problem are explained.
Also, two alternative solutions to WDP are
discussed. In Section 4, technical details,
performance results and an example usage of CAWP
are given. The last section includes the conclusion
and future works.
2 ONLINE AUCTIONS
Emergence of the Internet has changed the way
people buy and sell goods. New types of electronic
marketplaces have been developed to create more
efficient markets (Bakos, 1998). Online Auctions
have been one of the most successful electronic
markets (Wolfram|Alpha, 2009). Success of the
online auctions comes from the capabilities that they
provide both to buyers and sellers. As a buyer, one
can bid on large number of items from different
sources and he/she has the potential to find goods in
lower prices. As a seller, you can reach great number
of potential buyers.
2.1 Auctions
There are four common auction types. Most of the
other auction types are derived from these basic four
auction types (Klemperer, 2004).
1. First-Price Sealed Bid Auction: All bidders
submit their valuations in sealed bids,
simultaneously. By this way it is guaranteed that
no bidder knows the bid of the others. The
highest bidder who pays the price gets the good.
2. English Auction (a.k.a. open-cry ascending price
auction): English auction is the most common
form of auction used today. In this form, bidders
bid openly against each other. Each bid should
be higher than the previous one. The auction
ends when no bidder is willing to raise the final
bid or bidding period is over. The highest bidder
gets the good.
3. Dutch Auction (a.k.a. open-cry descending price
auction): This auction type is similar to the
English auction. The auctioneer begins with
setting a high price to the good. Initial price is
gradually lowered until one bidder accepts to pay
that amount. Last announced amount is paid by
the bidder.
4. Vickrey Auction (a.k.a. sealed-bid second-price
auction): It is identical to the first-price sealed-
bid auction except that winning bidder pays not
his bid amount but the second highest bidder’s
amount.
2.2 Electronic Auctions
Electronic auctions became an important part of the
electronic trading. In general, complete trading
process of any online auction has the following steps
(Kumar and Feldman, 1998):
1. Initial buyer and seller registration: All parties
are authenticated.
2. Setting up a particular auction event: Goods are
described; auction rules are set and auction is
started.
3. Scheduling and advertising: Upcoming auctions
are notified to attract potential buyers.
4. Bidding: All the bids are collected. Bid validity
is verified during bidding period and bids are
placed until the bidding period is over.
5. Evaluation of bids, closing the auction: The
auction closing rules are applied and the winner
bids are determined. Winners and losers are
notified back.
6. Trade settlement: Payment and good delivery are
realized.
Furthermore, for the sake of standardization, every
electronic auction platform are also expected to
support the following properties (Omote, 2002):
1. Anonymity: Loser bidders should not be
identifiable.
2. Non-cancelability: A winner is always identified
that he cannot deny having bid to the auction.
3. Public verifiability: Anybody could publicly
verify the winning bid is really the highest value
and valid.
4. Unforgeability: Impersonation of sellers and
bidders should be prevented.
5. Robustness: Auction process should not be
interrupted, even due to invalid bids.
CAWP - A Combinatorial Auction Web Platform
83
6. Fairness: Every bid should have the same
priority; there should be no favor to any
individual’s bids.
7. Efficiency of bidding: The computation of
determining a winner bid and verifying that
should be practical.
In CAWP, most of the above processing steps are
realized together with the mentioned properties. The
details of them will be given in subsection 4.2.
3 COMBINATORIAL AUCTIONS
CAs can be categorized according to certain criteria
described below:
1. Categorization based on bidding style
:
Open-Bid Combinatorial Auctions: Bidders are
aware of competing bidders’ bids. All bids are
publicly announced.
Sealed-Bid Combinatorial Auctions: Each bidder
is only aware of his/her bids. After bidding
process is completed and winner is determined, it
can be announced. Hiding the bids is necessary
during bidding time.
2. Categorization based on the number of goods
:
Single-Unit Combinatorial Auctions: Amount of
the each individual item is one. For example, if
there are five identical items, they must be
placed to the auction as different items which
have the same product information.
Multi-Unit Combinatorial Auctions: Amount of
the individual items may be more than one.
3. Categorization based on pricing
:
Reserve Combinatorial Auctions: Seller may put
a base acceptance price on each item during
auctioning. Since in CA bundles of items are bid
together, amount of bid should be more than the
sum of the items’ base prices in the bundle.
Non-Reserve Combinatorial Auctions: Seller
cannot put a base acceptance price to their items
in the auction. Winner(s) pay the amount they
bid and get the items even they are below their
original value.
Reverse Combinatorial Auctions: Buyers may
want series of items and sellers bid group of that
items. Least expensive bids are accepted.
CAWP implements a Sealed-Bid Single-Unit
Combinatorial Auction mechanism where items can
have reserved prices. They are set by the Auctioneer.
Every item put in an auction is single unit, if two
identical items is needed to be put in an auction, they
should be placed separately.
In CAs, bidders are allowed to express
themselves freely and place any combination of bid
items for the auction. However, this comes with an
explosion of the size of the solution space. Winner
Determination Problem is the problem of deciding
the allocation of winner bids, in a set of bids placed
to the auction, so that the revenue of the auctioneer
can be maximized.
Formally, let I be the set of items under
consideration and R
+
be the set of non-negative real
numbers. Then, we say that a bid b = (I
b
, P
b
,) is an
element of S = (2
I
- {Ø}) × R
+
. That means any
subset of power set of items I other than the empty
set may have an assigned value decided by its
bidder. Let B be a subset of S. A set F
B is said to
be feasible if
b,c
F, c
b and I
b
I
c
= Ø. That is
no two items in bidding subsets are the same. Also,
let Φ(B) be the set of all possible feasible allocations
for B. Further, let I(B)=
Bb
I
b
be the set of goods
contained in the bids of B.
Definition 1
: Winner Determination Problem is to
find an allocation W
Φ(B) such that
F
Φ(B) the
following should hold
Wb
b
Fb
b
PP
Such allocation is said to be optimal or revenue
maximizing (Brown et.al., 1999).
WDP is hard because one would need to check
all subset of the bids to identify whether they are
feasible (no conflict of items) and how much
revenue they may provide. A feasible subset of the
bids that has the maximum revenue is the optimal
solution. There are 2
k
subsets of bids where k being
the number of bids (Cramton et.al, 2006).
In general, there are three main factors affecting
the solution time for a given WDP instance. These
are the number of goods, number of bids and
distribution of the bids. If there are some dominant
bids in the system, solution can be found in
dramatically shorter time. This is because when a
solver accepts a dominant bid, it helps maximizing
the auctioneer revenue and reduces the solution
space, causing a solution to be found faster.
Combinatorial Auction Structured Search
(CASS) (Brown et.al., 1999) and Combinatorial
Auction Branch on Bids (CABOB) (Sandholm et.al.,
2001) are two known algorithms for efficient
solution of WDP:
1. Combinatorial Auction Structured Search
(CASS) Algorithm: CASS uses exhaustive search for
determining optimal solution. It suggests a simple
brute-force search approach supported by four
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84
significant heuristic improvements. CASS structures
(or shapes) the search space in order to avoid
conflicting bids with some overlaping items. It keeps
the result of the searches done up to a point and
prunes the search tree. Together with CASS, a test
suite is developed to create sample auction setups
and to test the systems performance. This test suite
is known as CATS (Cramton et.al., 2007)(Brown
et.al., 2000).
2. Combinatorial Auction Branch on Bids
(CABOB) algorithm: CABOB is a tree search
algorithm where tree is branched on bids. It makes a
dept-first Branch&Bound search on the tree.
Branch&Bound search provides a systematic
enumeration of all possible solutions and it prunes
large subsets of fruitless candidate solutions by
using upper and lower bounding (Land and Doig,
1960). In CAWP, we prefered to use a solver that
supports the CASS algorithm.
4 COMBINATORIAL AUCTION
WEB PLATFORM
In this section CAWP will be introduced, with its
functionalities according to the system and the user
requirements. Technical details and performance
results and a comparison with another CA system
are also given.
4.1 General Properties of CAWP
Among the six steps describing complete trading
process (given in subsection 2.2), CAWP fully
supports the steps 1, 2, 4 and 5. Related to step 3,
there is no advertisement support but the users can
see and join directly to (or just observe) the product
sets open to bidding. Also, there is neither payment
nor good delivery tracking capabilities of the
system. The requirements for a typical online
auction system has also been given in subsection
2.2. Most of these requirements are satisfied by
CAWP as described below:
Loser bids are not made known to all bidders
(anonymity). Bidder logs in to the system before
bidding so a winner is always identified (non-
cancelability). Public verification of the winning bid
is really the highest value is not possible. This is
because the loser bids are not announced publicly.
Note that even this could be the case; such
verification would require re-solving the WDP under
consideration. The only mechanism against
impersonation is the username/password usage.
Impersonation of another bidder is not possible
without stealing their user name and password
(unforgeability). A person can impersonate another
person in the CAWP, and jeopardize the fairness of
the trade, but after single act this person can be
notified and receive bad comments, or it can go to
account suspension. CAWP prevents bidders to
place invalid bids, and keeps the auction process
uninterrupted (robustness). In CAWP bids or bidders
have no priority (fairness). Finally, because of the
algorithmic complexity of the WDP problem, for
some problem instances the computation of
determining and verifying a winner bid may not be
practical (efficiency of bidding). In CAWP, this
problem is tried to be handled by putting “at most 30
item per auction” rule for sellers. By this way, one
can get a response from the WDP solver in an
acceptable time.
Below is the list of implemented CAWP
properties based on system/user requirements that
are considered during development:
Authentication of the users is a must for both
bidding and creating auctions.
Any internet user can enter to the CAWP site and
view the products information and auctions.
However, user must be logged in to get bidding
and auctioning capabilities.
There is no hierarchy or priority between users of
the system.
The system provides its auctioneers to set some
parameters of the auction including auction
name, auction end time, items in the auction,
items’ base prices.
Bidders can bid any bundle of items as long as
they are in the same auction.
The system assists bidders with the minimum
acceptable amount of bid being the sum of base
prices of items in the bid.
Users can withdraw their bids until bidding
session is over.
Auctioneer can drop an auction if there are no
bids placed on any goods in the auction.
Buyers and sellers can write comments about the
people they trade with.
Platform has an internal messaging system.
Sellers and buyers can send private messages to
each other.
Number of items that can be on a single auction
is maximum 30.
Real procurement of the goods is realized
between seller and buyer. CAWP only gives
buyers and sellers capability to comment about
their actual trading experiences.
CAWP - A Combinatorial Auction Web Platform
85
4.2 Technical Details and Performance
Results
Technically, CAWP is constituted from four main
components. The first one is the web-component
using which users can create auctions, and make bid.
The winner determination problem is generated and
results are notified via this component. Second
component is the solver-component that gets the
problems generated by the web-component, solves
them and returns the solution. Third component is
the database-component which is used by the web
and solver components. Bid, auction, and bidder
information are all kept by database-component.
Solver-component gets necessary data from the
database-component to create the winner
determination problem file. After the solver’s
execution, results are put back into the database. The
last component is the customization- component.
This component is necessary to enable CAWP
without knowing web programming. Site
customization can be achieved by using this
component. Figure 1 shows how WDP solver
program interacts with the remaining components of
the platform. Optimizer-handler seen in Figure 4
aims to provide interoperation of CAWP web
platform and the CASS solver. Throughout the
process, the handler plays the main control-unit role.
It first checks whether there exists a WDP to be
solved or not. If any, it translates the problem
description kept in the database to the acceptable
format of the CASS solver. Concurrently, it calls the
CASS solver. Consequently, the problem is solved,
the result is taken as generated output file, and put
back into the database.
All technologies used in CAWP are open source.
The overall system performance clearly depends on
the performance of the technologies used.
Performance issues related to the database system
and web server that are used can be found in
(MySQL, 2005) and (Apache, 2009), respectively.
Aside from these, the critical component that effects
the general performance is clearly the WDP solver.
The relative performance of the CASS solver has
been evaluated in (Brown and Shoham, 2009). In
order to be able to better tuning of the CAWP
system, we executed a series of performance test
scenarios on Intel® Core™2 Duo 2.66 GHz CPU,
4GB Ram, Windows XP Professional environment.
We created 10 different scenarios for every different
number of good and bid instances. The test scenarios
are generated with CATS tool (Brown et.al.,
2000).Table 1 shows the average completion time of
the executions in seconds. Even if there are 5000
bids to a single auction, the solver can still produce
an answer within minutes. Also, if the number of
bids is small even the auctions with greater number
goods can be solved quickly. But still the major
parameter that effects the solution time is the
number of goods.
Figure 1: WDP solver interaction schema.
When we keep the number of bids as 5000 and
increase the number of goods from 30 to 50 the
completion time of the problem increases from
151.860 seconds to 3713.246 seconds, dramatically.
Increasing number of concurrent CASS solvers
running on a single machine reduces the overall
performance of the system (see Table 2). If aim is to
increase the throughput of the system, concurrent
solvers should run on different machines. One solver
per processor gives the highest expected
performance. The results in Table 2 are obtained by
taking runs on a dual core machine where two or
more solvers run on different CPUs.
In Figure 2, the NPC aspect of the problem solving
operation can be seen. The completion time is
sensitive to the number of goods variable I
especially when I reaches to 50.Note that the CAWP
system is not evaluated by their users in terms of its
usability, yet.
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86
Table 1: Average completion time results for the system
tests.
Number of
Goods
Number of Bids
Results
(in seconds)
10 100 0.002
10 1000 0.016
10 3000 0.210
30 100 0.003
30 1000 0.047
30 3000 12.840
30 5000 151.860
40 100 0.015
40 1000 6.552
40 3000 126.017
40 5000 177.721
50 100 0.020
50 1000 8.424
50 3000 3713.246
Table 2: Performance results for many solvers running on
a two- processor machine.
# of
Solvers
# of
Goods
# of
Bids
Results
(in seconds)
2 30 3000 17.34
3 30 3000 23.87
4 30 3000 35.31
Figure 2: Completion time results for different instances of
number of goods and number of bids pairs.
Finally, for our comparative purpose, we considered
an example CA system namely Online Iterative
Combinatorial Auction System (OICAS) (Fang and
Wang, 2005). It is a prototype system implemented
using Visual Basic and Microsoft Access. OICAS
has following characteristics:
The auctioneer can determine who can
participate in an auction.
Only legitimate users (bidders) can participate in
an auction.
Bidders can bid for any bundle of items with
acceptable price.
The system tells bidders the required minimum
winning price for their bids automatically.
The main difference between OICAS and CAWP is
that OICAS is an offline prototype implemented in
Microsoft Visual Basic language and Microsoft
Access database. On the other hand, CAWP is a true
web application implemented using PHP for server
side scripting, MySql for database management,
Java for implementing optimizer handler, and C for
the WDP solver. These components can be deployed
and run on different machines. Also, although
OICAS permits its auctioneers to choose their
bidders, CAWP believes in the fairness for the
bidders and it does not allow an auction to be limited
for only a certain group of bidders.
4.3 An Example CAWP Usage For
Custom Built Furniture
Combinatorial Auctioning
A carpenter producing custom built furnitures can
sell combinations of his products via CAWP in order
to increase his revenue. However he needs a
technical assistance to deploy and public his
furniture combinatorial auction website, if otherwise
he can do it himself. As the first step each different
product categories are introduced to the system.
Then an auctioneer account for the carpenter should
be created. A list of available products to be
auctioned are entered to the system by giving
product name, category, description, picture, serial
number and reserve price. Following this, an auction
instance including auction name, duration and list of
target items is generated. The auctioneer can open
more than one auction. After this the bidding period
is started. Within the auction period the system
accepts bids from its registered users. For each bid
the bidders should give the list of items to bid on and
a valid price. By the end of auction period the
system automatically initiates the optimizer in order
to solve the generated WDP problem. The bidding
results are announced at the site in individual basis.
In other words a bidder is only informed about his
winning status, rather then the others. For the time
being the rest of the trading process is not supported
by the system. On the other hand the auctioneer or
the bidders can enter comments about their
experience with the trading process.
CAWP - A Combinatorial Auction Web Platform
87
5 CONCLUSIONS
In this paper, an online combinatorial auctioning
platform CAWP is introduced. The platform
provides its users to create and to participate in
combinatorial auctions without having to care about
either the complexity of the WDP or its efficient
solution. The performance requirement of the system
is clearly more higher than a typical online
auctioning system. This is mainly due to the required
involvement with an NP-Complete WDP problem.
In our solution different technologies combined
together and integrated under the platform. The
technologies include server side web scripting,
database management, solver handler, and the WDP
solver. All these technologies, except the WDP
solver have been created, originally. Using open
source technologies enabled us to build an operating
system independent platform.
In future, CAWP is planned to be supported by a
third party payment system in order to achieve better
trading opportunities. Also, the system may support
a realistic mechanism to reward and penalize its
users. A better WDP solver or a general purpose
solver package can be adapted to the system in order
to still increase the WDP solution performance.
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