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DOI: 10.4230/LIPIcs.AFT.2024.19

Credible, Optimal Auctions via Public Broadcast

Authors: Tarun Chitra, Matheus V. X. Ferreira, and Kshitij Kulkarni

Published in: LIPIcs, Volume 316, 6th Conference on Advances in Financial Technologies (AFT 2024)

Abstract

We study auction design in a setting where agents can communicate over a censorship-resistant broadcast channel like the ones we can implement over a public blockchain. We seek to design credible, strategyproof auctions in a model that differs from the traditional mechanism design framework because communication is not centralized via the auctioneer. We prove this allows us to design a larger class of credible auctions where the auctioneer has no incentive to be strategic. Intuitively, a decentralized communication model weakens the auctioneer’s adversarial capabilities because they can only inject messages into the communication channel but not delete, delay, or modify the messages from legitimate buyers. Our main result is a separation in the following sense: we give the first instance of an auction that is credible only if communication is decentralized. Moreover, we construct the first two-round auction that is credible, strategyproof, and optimal when bidder valuations are α-strongly regular, for α > 0. Our result relies on mild assumptions - namely, the existence of a broadcast channel and cryptographic commitments.

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Tarun Chitra, Matheus V. X. Ferreira, and Kshitij Kulkarni. Credible, Optimal Auctions via Public Broadcast. In 6th Conference on Advances in Financial Technologies (AFT 2024). Leibniz International Proceedings in Informatics (LIPIcs), Volume 316, pp. 19:1-19:16, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2024)

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@InProceedings{chitra_et_al:LIPIcs.AFT.2024.19,
  author =	{Chitra, Tarun and Ferreira, Matheus V. X. and Kulkarni, Kshitij},
  title =	{{Credible, Optimal Auctions via Public Broadcast}},
  booktitle =	{6th Conference on Advances in Financial Technologies (AFT 2024)},
  pages =	{19:1--19:16},
  series =	{Leibniz International Proceedings in Informatics (LIPIcs)},
  ISBN =	{978-3-95977-345-4},
  ISSN =	{1868-8969},
  year =	{2024},
  volume =	{316},
  editor =	{B\"{o}hme, Rainer and Kiffer, Lucianna},
  publisher =	{Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
  address =	{Dagstuhl, Germany},
  URL =		{https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.AFT.2024.19},
  URN =		{urn:nbn:de:0030-drops-209550},
  doi =		{10.4230/LIPIcs.AFT.2024.19},
  annote =	{Keywords: credible auctions, blockchains, cryptographic auctions, optimal auction design, mechanism design with imperfect commitment}
}

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Credible, Optimal Auctions via Public Broadcast

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