Modelling of a Combinatorial Double Auction using DEVS

Abstract

Combinatorial auctions have emerged as suitable mechanisms to efficiently coordinate supply and demand in electronic markets. Most of the combinatorial auction designs found in the literature assume that all market participants are perfectly rational and thus develop centralized simulation models according to that premise. However, participants in real-world auctions tend to exhibit bounded rationality, which requires a decentralized modelling approach. An absence of specialized simulation frameworks for decentralized implementation of auctions has been noted. To cover this gap, this work presents a combinatorial iterative double auction model using the Discrete Event System Specification (DEVS) formalism that can be employed to simulate a combinatorial auction in a decentralized fashion.