Preserving Bidder Privacy in Assignment Auctions: Design and Measurement

Forthcoming in Management Science

43 Pages Posted: 3 Jan 2014 Last revised: 11 Feb 2020

See all articles by De Liu

De Liu

University of Minnesota - Minneapolis

Adib Bagh

University of Kentucky - Departments of Economics and Mathematics

Date Written: December 30, 2018

Abstract

Motivated by bidders' interests in concealing their private information in auctions, we propose an ascending clock auction for unit-demand assignment problems that economizes on bidder information revelation, together with a new general-purpose measure of information revelation. Our auction uses an iterative partial reporting design such that for a given set of prices, not all bidders are required to report their demands, and when they are, they reveal a single preferred item at a time instead of all. Our design can better preserve bidder privacy while maintaining several good properties: sincere bidding is an ex-post Nash equilibrium, ending prices are path independent, and efficiency is achieved if the auction starts with the auctioneer's reservation values. Our measurement of information revelation is based on Shannon's entropy and can be used to compare a wide variety of auction and non-auction mechanisms. We propose a hybrid quasi-Monte Carlo procedure for computing this measure. Our numerical simulations show that our auction consistently outperforms a full-reporting benchmark with up to 18% less entropy reduction, and
scales to problems of over 100,000 variables.

Keywords: Assignment Problem, Ascending Auctions, Privacy Preservation, Entropy, Quasi-Monte Carlo

JEL Classification: D44, C72, C15, C63

Suggested Citation

Liu, De and Bagh, Adib, Preserving Bidder Privacy in Assignment Auctions: Design and Measurement (December 30, 2018). Forthcoming in Management Science, Available at SSRN: https://ssrn.com/abstract=2373976 or http://dx.doi.org/10.2139/ssrn.2373976

De Liu (Contact Author)

University of Minnesota - Minneapolis ( email )

110 Wulling Hall, 86 Pleasant St, S.E.
308 Harvard Street SE
Minneapolis, MN 55455
United States

Adib Bagh

University of Kentucky - Departments of Economics and Mathematics ( email )

Lexington, KY 40506
United States

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