A robust open ascending-price multi-unit auction protocol against false-name bids

Authors:
Atsushi Iwasaki;Makoto Yokoo;Kenji Terada
Affiliations:
NTT Corporation, Kyoto, JAPAN;NTT Corporation, Kyoto, JAPAN;NTT Corporation, Tokyo, Japan
Venue:
Proceedings of the 4th ACM conference on Electronic commerce
Year:
2003

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Abstract

This paper presents a new ascending-price multi-unit auction protocol. As far as the authors are aware, this is the first protocol that has an open format, and in which sincere bidding is an equilibrium strategy, even if the marginal utilities of each agent can increase and agents can submit false-name bids. As ever-increasing numbers of companies and consumers are trading on Internet auctions, a new type of cheating called "false-name bids" has been noticed. Specifically, there may be some agents with fictitious names such as multiple e-mail addresses. The VCG is not an open format, and truth-telling is no longer a dominant strategy if agents can submit false-name bids and the marginal utilities of each agent can increase. The Iterative Reducing (IR) protocol with a sealed-bid format is robust against false-name bids, although it requires the auctioneer to carefully pre-determine a reservation price for one unit. Open format protocols, such as the Ausubel auction, outperform sealed-bid format protocols in terms of the simplicity and privacy-preservation. These two advantages are said to encourage more agents to bid sincerely and to provide the seller with higher revenue. We extend the Ausubel auction to our proposed protocol which can handle the cases where the marginal utilities of each agent can increase. Moreover, it is robust against false-name bids and does not require the auctioneer to set a reservation price. Our simulation result indicates that our protocol herein obtains a social surplus close to Pareto efficient and that it outperforms the IR with respect to the social surplus and the seller's revenue.