2026-10-03T22:35:04Z https://drops.dagstuhl.de/oai

oai:drops-oai.dagstuhl.de:27872 2026-10-02T17:40:22Z ddc:004 open_access

Credible Auctions via MPC Gadgets: Bounding Information Leakage Under Abort Ferreira, Matheus V. X. Multi-Party Computation Credible Auctions Revenue-optimal Auctions Cryptographic Auctions The design of credible auctions - mechanisms where a revenue-maximizing auctioneer has no incentive to deviate from the protocol - faces a fundamental cryptographic barrier when the auctioneer controls shill bidders. While a natural approach is to use Secure Multi-Party Computation (MPC) to remove the trusted auctioneer, Cleve’s (1986) impossibility of fair coin flipping implies that monolithic MPC protocols grant the auctioneer a "free option": they can learn the auction’s outcome and unilaterally abort if the revenue is unsatisfactory. Previous attempts to mitigate this abort asymmetry using cryptographic commitments and ex-ante penalties fail for heavy-tailed distributions. We overcome this impossibility by introducing the MPC Decomposition Principle. Rather than encrypting the entire mechanism, we use MPC strictly as an information-restriction tool. We isolate the winner determination problem into a minimal MPC gadget that computes and reveals the winner’s identity but no payment information. This qualitative restriction mathematically bounds the information leaked upon an abort. By combining this gadget with sequential revelation and finite economic penalties, we design the Sequential Revelation Auction (SRA). We prove that bounding the information leakage strictly bounds the value of the free option, showing that a penalty of κ ≥ ∑_{i=1}^n Rev(F_i) is sufficient for credibility, and tight in the worst case: for the equal-revenue distribution - where this threshold coincides exactly with the optimal revenue - every smaller penalty admits a profitable deviation. Leveraging low-round-complexity MPC, the SRA resolves an open question of [Akbarpour and Li, 2020] and [Ferreira and Weinberg, 2020] by providing the first constant-round, incentive-compatible, revenue-optimal credible auction for all product distributions. Schloss Dagstuhl – Leibniz-Zentrum für Informatik Matheus V. X. Ferreira 2026 Is Part Of LIPIcs, Volume 395, 8th Conference on Advances in Financial Technologies (AFT 2026) InProceedings Text doc-type:ResearchArticle publishedVersion application/pdf doi:10.4230/LIPIcs.AFT.2026.18 urn:nbn:de:0030-drops-278726 https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2026.18 eng https://creativecommons.org/licenses/by/4.0/legalcode