Strategy-Proof and Non-Wasteful Multi-Unit Auction via Social Network

TL;DR

This paper introduces a new social network-based auction mechanism that is strategy-proof, non-wasteful, and individually rational, outperforming naive mechanisms in social surplus and revenue.

Contribution

It proposes the first mechanism satisfying all key properties for multi-unit unit-demand auctions via social networks, with comprehensive performance analysis.

Findings

Mechanism dominates naive ones in social surplus and revenue

Achieves constant approximation of worst-case efficiency loss

Analyzes complexity of revenue optimization

Abstract

Auctions via social network, pioneered by Li et al. (2017), have been attracting considerable attention in the literature of mechanism design for auctions. However, no known mechanism has satisfied strategy-proofness, non-deficit, non-wastefulness, and individual rationality for the multi-unit unit-demand auction, except for some naive ones. In this paper, we first propose a mechanism that satisfies all the above properties. We then make a comprehensive comparison with two naive mechanisms, showing that the proposed mechanism dominates them in social surplus, seller's revenue, and incentive of buyers for truth-telling. We also analyze the characteristics of the social surplus and the revenue achieved by the proposed mechanism, including the constant approximability of the worst-case efficiency loss and the complexity of optimizing revenue from the seller's perspective.