Characterization of Strategy/False-Name Proof Combinatorial Auction Protocols: Price-Oriented, Rationing-Free Protocol

Abstract

This paper introduces a new distinctive class of combinatorial auction protocols called priceoriented, rationing-free (PORF) protocols. The outline of a PORF protocol is as follows: (i) for each bidder, the price of each bundle of goods is determined independently of his/her own declaration (while it can depend on the declarations of other bidders), (ii) we allocate each bidder a bundle that maximizes his/her utility independently of the allocations of other bidders (i.e., rationing-free). Although a PORF protocol appears quite different from traditional protocol descriptions, surprisingly, it is a sufficient and necessary condition for a protocol to be strategy-proof. Furthermore, we show that a PORF protocol satisfying additional conditions is false-name-proof; at the same time, any falsename-proof protocol can be described as a PORF protocol that satisfies the additional conditions. A PORF protocol is an innovative characterization of strategy-proof protocols and the first attempt to characterize false-name-proof protocols. Such a characterization is not only theoretically significant but also useful in practice, since it can serve as a guideline for developing new strategy/false-name proof protocols. We present a new false-nameproof protocol based on the concept of a PORF protocol. 1