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Credible, Truthful, and Two-Round (Optimal) Auctions via Cryptographic Commitments

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  • Matheus V. X. Ferreira
  • S. Matthew Weinberg

Abstract

We consider the sale of a single item to multiple buyers by a revenue-maximizing seller. Recent work of Akbarpour and Li formalizes \emph{credibility} as an auction desideratum, and prove that the only optimal, credible, strategyproof auction is the ascending price auction with reserves (Akbarpour and Li, 2019). In contrast, when buyers' valuations are MHR, we show that the mild additional assumption of a cryptographically secure commitment scheme suffices for a simple \emph{two-round} auction which is optimal, strategyproof, and credible (even when the number of bidders is only known by the auctioneer). We extend our analysis to the case when buyer valuations are $\alpha$-strongly regular for any $\alpha > 0$, up to arbitrary $\varepsilon$ in credibility. Interestingly, we also prove that this construction cannot be extended to regular distributions, nor can the $\varepsilon$ be removed with multiple bidders.

Suggested Citation

  • Matheus V. X. Ferreira & S. Matthew Weinberg, 2020. "Credible, Truthful, and Two-Round (Optimal) Auctions via Cryptographic Commitments," Papers 2004.01598, arXiv.org, revised May 2020.
  • Handle: RePEc:arx:papers:2004.01598
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    References listed on IDEAS

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    1. Paul Klemperer, 2002. "What Really Matters in Auction Design," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 169-189, Winter.
    2. Qingmin Liu & Konrad Mierendorff & Xianwen Shi & Weijie Zhong, 2019. "Auctions with Limited Commitment," American Economic Review, American Economic Association, vol. 109(3), pages 876-910, March.
    3. Roger B. Myerson, 1981. "Optimal Auction Design," Mathematics of Operations Research, INFORMS, vol. 6(1), pages 58-73, February.
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    Cited by:

    1. Tim Roughgarden, 2020. "Transaction Fee Mechanism Design for the Ethereum Blockchain: An Economic Analysis of EIP-1559," Papers 2012.00854, arXiv.org.
    2. Hao Chung & Elaine Shi, 2021. "Foundations of Transaction Fee Mechanism Design," Papers 2111.03151, arXiv.org, revised Nov 2022.
    3. Matheus V. X. Ferreira & David C. Parkes, 2022. "Credible Decentralized Exchange Design via Verifiable Sequencing Rules," Papers 2209.15569, arXiv.org, revised Apr 2023.
    4. Aranyak Mehta & Andres Perlroth, 2023. "Auctions without commitment in the auto-bidding world," Papers 2301.07312, arXiv.org, revised Mar 2023.
    5. Jason Milionis & Dean Hirsch & Andy Arditi & Pranav Garimidi, 2022. "A Framework for Single-Item NFT Auction Mechanism Design," Papers 2209.11293, arXiv.org.
    6. Meryem Essaidi & Matheus V. X. Ferreira & S. Matthew Weinberg, 2022. "Credible, Strategyproof, Optimal, and Bounded Expected-Round Single-Item Auctions for all Distributions," Papers 2205.14758, arXiv.org.

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