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WECWIS
2003
IEEE

Auctions with Untrustworthy Bidders

13 years 9 months ago
Auctions with Untrustworthy Bidders
The paper analyzes auctions which are not completely enforceable. In such auctions, economic agents may fail to carry out their obligations, and parties involved cannot rely on external enforcement or control mechanisms for backing up a transaction. We propose two mechanisms that make bidders directly or indirectly reveal their trustworthiness. The first mechanism is based on discriminating bidding schedules that separate trustworthy from untrustworthy bidders. The second mechanism is a generalization of the Vickrey auction to the case of untrustworthy bidders. We prove that, if the winner is considered to have the trustworthiness of the second-highest bidder, truthfully declaring one’s trustworthiness becomes a dominant strategy. We expect the proposed mechanisms to reduce the cost of trust management and to help agent designers avoid many market failures caused by lack of trust.
Sviatoslav Braynov, Tuomas Sandholm
Added 05 Jul 2010
Updated 05 Jul 2010
Type Conference
Year 2003
Where WECWIS
Authors Sviatoslav Braynov, Tuomas Sandholm
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