The Cross-Entropy Method for the Winner Determination Problem in Combinatorial Auctions

Abstract

The combinatorial auction is one of the important methods used for multi-item auctions, and the solution to the winner determination problem (WDP) is the key factor in the widespread application of combinatorial auctions. This paper explores the use of the cross-entropy method to solve the WDP, which is an NP problem. The performance of the proposed approach is evaluated on the basis of two well-known benchmark test cases. The experimental results show that, compared with the genetic algorithm and the particle swarm optimization algorithm, the cross-entropy（CE）method has the advantages of a higher success rate and a shorter time for solving the WDP. Therefore, the CE method provides a high-quality solution for the effective solution of the problem of determining winning bids in combined auctions.