Combinatorial auction design for real-estate markets

This paper describes a combinatorial auction design for real-estate markets where floor space (in a multi-storeyed building) is to be allocated to various interested parties. Our design is based on lab experiments that provide guidance in choices regarding pricing, feedback, and activity rules. In addition, the allocation needs to satisfy several municipal and building regulations. We show how these regulations can be included in an integer program that is used to solve the winner determination problem, and discuss its computational complexity. Finally, we report on a practical application of this design, where over one hundred bidders took part in the first combinatorial auction for housing space, in a newly erected building in Amsterdam (the Netherlands).