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We study the communication complexity of welfare maximization in combinatorial auctions with $m$ items and two subadditive bidders. A $frac{1}{2}$-approximation can be guaranteed by a trivial randomized protocol with zero communication, or a trivial deterministic protocol with $O(1)$ communication. We show that outperforming these trivial protocols requires exponential communication, settling an open question of [DobzinskiNS10, Feige09]. Specifically, we show that any (randomized) protocol guaranteeing a $(frac{1}{2}+frac{6}{log_2 m})$-approximation requires communication exponential in $m$. This is tight even up to lower-order terms: we further present a $(frac{1}{2}+frac{1}{O(log m)})$-approximation in poly($m$) communication. To derive our results, we introduce a new class of subadditive functions that are far from fractionally subadditive functions, and may be of independent interest for future works. Beyond our main result, we consider the spectrum of valuations between fractionally-subadditive and subadditive via the MPH hierarchy. Finally, we discuss the implications of our results towards combinatorial auctions with strategic bidders.
Mechanism design for one-sided markets has been investigated for several decades in economics and in computer science. More recently, there has been an increased attention on mechanisms for two-sided markets, in which buyers and sellers act strategic
The market economy deals with many interacting agents such as buyers and sellers who are autonomous intelligent agents pursuing their own interests. One such multi-agent system (MAS) that plays an important role in auctions is the combinatorial aucti
We study combinatorial auctions with bidders that exhibit endowment effect. In most of the previous work on cognitive biases in algorithmic game theory (e.g., [Kleinberg and Oren, EC14] and its follow-ups) the focus was on analyzing the implications
In this note we study the greedy algorithm for combinatorial auctions with submodular bidders. It is well known that this algorithm provides an approximation ratio of $2$ for every order of the items. We show that if the valuations are vertex cover f
A seminal result of Bulow and Klemperer [1989] demonstrates the power of competition for extracting revenue: when selling a single item to $n$ bidders whose values are drawn i.i.d. from a regular distribution, the simple welfare-maximizing VCG mechan