Credible, Optimal Auctions via Public Broadcast

TL;DR

This paper introduces a new class of credible, strategyproof auctions enabled by decentralized broadcast communication, demonstrating their advantages over traditional centralized auction models and providing optimal auction designs under certain valuation conditions.

Contribution

It presents the first credible auction that relies on decentralized communication and constructs the first two-round credible, strategyproof, and optimal auction for b1-strongly regular valuations.

Findings

Decentralized communication enhances auction credibility.

A novel two-round auction achieves strategyproofness and optimality.

Credibility depends on decentralization and cryptographic assumptions.

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 $\alpha$-strongly regular, for $\alpha > 0$. Our result relies on mild assumptions -- namely, the existence of a broadcast channel and cryptographic commitments.