An approach to avoiding shill bids based on combinatorial auction in volume discount

Volume discount is seen as an effective form of electronic commerce and a promising field for applying agent technologies. In current volume discount mechanisms, items are not allocated efficiently to buyers. Namely, social surplus is not maximum in existing volume discount schemes. To solve this problem, we propose a volume discount mechanism based on the seller's reservation price and the payment adjustment value. First, a seller registers his/her items with the evaluation value functions. The seller's evaluation value is sealed and each buyer bids his/her evaluation value as sealed bid. After the deadline, the mechanism determines the allocation of bundles of items. A tentative price is decided and the payment adjustment value is calculated. Finally, the payment amount is calculated. Our mechanism has some key advantages. First, the mechanism is Pareto efficient. Second, our mechanism is a strategy-proof mechanism, that is, it has the incentive compatibility. Third, our mechanism provides individual rationality. Fourth, our mechanism is made based on the volume discount system, where the seller can give a signal indicating a discount for buyers. Finally, our mechanism weakens the influence of false name bids.