An expressive mechanism for auctions on the web

Auctions are widely used on the Web. Applications range from internet advertising to platforms such as eBay. In most of these applications the auctions in use are single/multi-item auctions with unit demand. The main drawback of standard mechanisms for this type of auctions, such as VCG and GSP, is the limited expressiveness that they offer to the bidders. The General Auction Mechanism (GAM) of [1] is taking a first step towards addressing the problem of limited expressiveness by computing a bidder optimal, envy free outcome for linear utility functions with identical slopes and a single discontinuity per bidder-item pair. We show that in many practical situations this does not suffice to adequately model the preferences of the bidders, and we overcome this problem by presenting the first mechanism for piece-wise linear utility functions with non-identical slopes and multiple discontinuities. Our mechanism runs in polynomial time. Like GAM it is incentive compatible for inputs that fulfill a certain non-degeneracy requirement, but our requirement is more general than the requirement of GAM. For discontinuous utility functions that are non-degenerate as well as for continuous utility functions the outcome of our mechanism is a competitive equilibrium. We also show how our mechanism can be used to compute approximately bidder optimal, envy free outcomes for a general class of continuous utility functions via piece-wise linear approximation. Finally, we prove hardness results for even more expressive settings