The design and implementation of a secure auction service

We present the design and implementation of a distributed service for performing sealed bid auctions. This service provides an interface by which clients, or “bidders”, can issue secret bids to the service for an advertised auction. Once the bidding period has ended, the auction service opens the bids, determines the winning bid, and provides the winning bidder with a ticket for claiming the item bid upon. Using novel cryptographic techniques, the service is constructed to provide strong protection for both the auction house and correct bidders, despite the malicious behavior of any number of bidders and fewer than one third of the servers comprising the auction service. Specifically, it is guaranteed that: bids of correct bidders are not revealed until after the bidding period has ended; the auction house collects payment for the winning bid; losing bidders forfeit no money; and only the winning bidder can collect the item bid upon. We also discuss techniques to enable anonymous bidding     

Design of online auctions: Proxy versus non-proxy settings

Recent years have witnessed the rapid development of online auctions. Currently, some online auctions, such as eBay, introduce a proxy bidding policy, under which bidders submit their maximum bids and delegate to a proxy agent to automatically outbid other competitors for the top bidder, whereas other online auctions do not. This paper compares these two widely used auction mechanisms (proxy setting and non-proxy setting) and characterizes the equilibrium bidding behavior and the seller's expected revenue. We find the proxy auction outperforms the non-proxy auction in terms of the seller's expected revenue. This dominance result is not prone to the specific bid announcement policy, the bidder's knowledge regarding the number of bidders, the impact of traffic congestion along the bidding process, the number of items sold through the auction, and the existence of a reserve price.We further find that the proxy setting usually fails to sustain the truthful bidding as a dominant strategy equilibrium even if no minimum bid increments are adopted, and the possibility of a low-valuation-bidder dilemma where the low-valuation bidders could be better off if all bidders collude to bid at the last minute. We also discuss the dramatically different equilibrium bidding behaviors under the two auction mechanisms.     

基于环签名理论的电子拍卖方案

基于环签名理论提出一个电子拍卖方案,适用于公司内部或者具有排外性的团体内部的拍卖,拍卖期间,成员可以在任何地点、任何时间提交自己的投标消息,等到拍卖结束后,再提交自己相应的投标值,匿名的同时又能证明投标消息的合法性,既证明了自己属于组内成员,又不会泄漏投标者的确切身份,保护了投标者的隐私。     

Bidder's strategy under group-buying auction on the Internet

The group-buying auction is a new kind of dynamic pricing mechanism on the Internet. It is a variant of the sellers' price double auction, which makes the bidders as a group through Internet to get the volume discounts, i.e., the more bidders bid, the lower the price of the object being auctioned becomes. In this paper, we analyze the group-buying auction under some assumptions, such as that the independent private values (IPVs) model applies and bidders are risk neutral and symmetric, etc., and build an incomplete information dynamic game model to illustrate the bidders' bidding process. It proves that for the bidders there exists a weakly dominant strategy S, i.e., no matter when a bidder arrives at the auction and what the bidding history is, the highest permitted bid price that is no greater than his value to the object is always his optimal bid price but may not be the unique one.     

Interplay between Buy-It-Now price and last minute bidding on online bidding strategies

Sellers and buyers on online auction sites like eBay have the option of setting and executing auction parameters such as auction length, Buy-It-Now price, starting price, reserve price, etc. Understanding why bidders choose to execute the Buy-It-Now price as opposed to submitting a bid at the last minute of an auction helps managers better choose auction parameters and generate more revenue. In this paper, we first study online bidder behavior pertaining to the execution of the Buy-It-Now option as opposed to the last minute bidding strategy on eBay. Consequently, we study the seller’s decision to set a Buy-It-Now option and the amount of it. Our main finding is that a dominant strategy for the seller is to offer a Buy-It-Now option at the beginning of the auction. An early bidder arriving at the auction site is indifferent in choosing threshold Buy-It-Now prices or moving onto the auction and under particular circumstances strategically waiting for the last minutes of the auction to submit a bid. We also provide conditions on the existence of a set of equilibria which predicts the outcome of the game of executing the Buy-It-Now option versus last-minute bidding on eBay.     

What Format for Multi-Unit Multiple-Bid Auctions?

This paper uses computational experiments where bidders learn over nonlinear bidding strategies to compare outcomes for alternative pricing format for multi-unit multiple-bid auctions. Multi-unit multiple-bid auctions, in which bidders are allowed to submit multiple price-quantity bids, are promising mechanisms for the allocation of a range of resources. The main advantage of such auctions is to avoid the lumpy bid problem which arises when bidders can only compete on the basis of one bid. However, there is great uncertainty about the best auction formats when multi-unit auctions are used. The theory can only supply the expected structural properties of equilibrium strategies and the multiplicity of potential equilibria makes comparisons across auction formats difficult. Empirical studies and experiments have improved our knowledge of multi-unit auctions but they remain scarce and most experiments are restricted to two bidders and two units. Moreover, they demonstrate that bidders have limited rationality and learn through experience. This paper constructs an agent-based computational model of bidders to compare the performance of alternative procurement auction formats under circumstances where bidders submit continuous bid supply functions and learn over time to adjust their bids in order to improve their net incomes. The setting is for independent private values. We show that bidding behaviour displays more interesting patterns than is depicted in the theoretical literature and that bidding patterns depend on the interplay between heterogeneity in the bidder population and the degree of rationing in the auction. Results indicate that the three auction formats have similar performance for most levels of competition but that their performances differ when competition is weak. This ranking is dependent on whether the population of bidders is homogenous or heterogeneous.     

Experiments with probabilistic quantum auctions

We describe human-subject laboratory experiments on probabilistic auctions based on previously proposed auction protocols involving the simulated manipulation and communication of quantum states. These auctions are probabilistic in determining which bidder wins, or having no winner, rather than always having the highest bidder win. Comparing two quantum protocols in the context of first-price sealed bid auctions, we find the one predicted to be superior by game theory also performs better experimentally. We also compare with a conventional first-price auction, which gives higher performance. Thus to provide benefits, the quantum protocol requires more complex economic scenarios such as maintaining privacy of bids over a series of related auctions or involving allocative externalities.      

Simultaneous Independent Online Auctions with Discrete Bid Increments

Decentralized multi-item auctions offer great opportunities for integrating fragmented online auction markets into larger markets with more efficient outcomes. This paper extends the theory of multi-item ascending auctions of substitutes by considering any finite positive bid increment and allowing the bidders to bid asyn-chronously instead of bidding in a round-robin fashion. We consider a setup where the bidders utilities over multiple items are additive and bound the maximum inefficiency in the allocation when the bidders follow a simple greedy strategy. We also obtain the limits within which the prices of individual items can vary from one outcome to another. For the special case of single unit bidder demand, we also bound the maximum surplus which a bidder can extract by unilaterally switching to some other strategy. The paper suggests an upper bound for the minimum required bid increment which would be necessary for competitive price discovery and truthful bidding in a practical online implementation.The work was done while the author was with IBM Research.     

Bidding behavior in dynamic auction settings: An empirical analysis of eBay

We study the impact of dynamic environment of eBay auctions on bidding behavior. Due to high-speed Internet and practically costless search possibilities, bidding behavior is no longer a function of characteristics of a single auction but depends on auctions running simultaneously, completed auctions, available Buy-It-Now prices as well as various outside options. We study how this dynamic market affects a bidder’s choice of participating in an auction or leaving eBay for an outside alternative. We analyze Texas Instruments (TI-83) Graphing Calculator auctions presented on eBay. We estimate a random-effects probit model to study bidders’ probability of staying in eBay, while controlling for unobservable individual-specific heterogeneity. Our main result shows that Market Tightness – the ratio of bidders to sellers – has a negative and significant effect on bidders’ decision to remain in eBay. Moreover, variables containing information from other eBay auctions significantly affect bidders’ participation decision, thus emphasizing the importance of the dynamic, multi-auction environment in eBay marketplace for potential buyers.     

Bidder-anonymous English auction protocol based on revocable ring signature

Privacy has become a factor of increasing importance in auction design. This paper introduces an efficient and spontaneous privacy-preserving English auction protocol based on revocable ring signature. The proposed protocol has three appealing characteristic: first, it offers conditional privacy-preservation: while the auctioneer can verify that a bidder is an authorized participant in the system only the collaboration of auctioneer and registration manager can reveal the true identity of a malicious bidder. Second, it is one-time registration: the bidder can take part in plural auctions in one time registration. Third, it is spontaneous: the bidder can bid without interaction with the auctioneer and other bidders. Finally, it is efficient: it saves the communication round complexity comparing with previously proposed solutions.     

A cryptographically t‐private auction system

We present a cryptographically t‐private protocol for electronic auctions whose low resource demands make it viable for practical use. Our construction is based on Yao's garbled circuits and pseudorandom number generators (PRNGs). Our protocol involves a field of (t + 1)² parties for the generation of the garbled circuit and permits an arbitrary large number of bidders. The computational requirements are low: Only t + 1 parties of the field have to use the PRNG, the remaining parties execute only primitive computations (XOR, permutations and sharing). The bidders have to stay active for one round of communication, independent of each other. Each bidder has to compute only t + 1 XOR‐operations. We present an implementation and evaluate its performance. The observed running time of our protocol is linear in the size of the auction circuit and the number of bidders and, as expected, grows quadratically in the parameter t. Copyright © 2010 John Wiley & Sons, Ltd.     

Cheating in online auction – Towards explaining the popularity of English auction

Action frauds constitute largest part of all Internet frauds. Cheating is a kind of fraud that does not have direct evidences of its occurrence. We conduct theoretical studies as well as simulation experiments to find out the effect of cheating in three important types of auctions: English auction, first-price sealed-bid, and second-price sealed-bid auction. Our cheating environment consists of shill bidding, bid shading and false bidding in English, first-price and second-price auction, respectively. In the experiments ordinary bidders, bidders with the equilibrium bidding strategy, and cheaters compete with each other. Both theoretical and experimental results confirm that the equilibrium bidding strategies indeed increases the bidders’ expected utility. Therefore, it can be concluded that adoption of rational bidding strategies can combat cheating. It is found that most of the auction sites intuitively prefer English auction to other auction mechanisms. There is not much theoretical or experimental evidence to support such an intuition. We use honest bidder’s expected gain and honest seller’s revenue loss as a basis to compare these three important auctions types. The analysis of the results reveals English auction to be the most preferred mechanism from both honest buyer’s and honest seller’s point of view. This result can be used as an experimental evidence to explain the popularity of English auction over the Internet.     

Distributed ascending proxy auction — A cryptographic approach

In recent years, auctions have become a very popular price discovery mechanism in the Internet. The common auction formats are typically centralized in nature. The peer-to-peer paradigm demands gearing up auctions for decentralized infrastructures. In this context, this paper proposes a distributed mechanism for ascending second-price auctions that relies on standard cryptographic algorithms. In essence, the auction protocol has the capability of preserving the privacy of the winning bidder’s true valuation. The auction protocol makes use of a high number of auctioneers divided into several groups. A bidder creates an encrypted chain of monotonously increasing bidding steps, where each bidding step can be decrypted by a different auctioneer group. This considerably reduces the attack and manipulation possibilities of malicious auctioneers. In addition, this secure approach does not require bidders to be online unless they are submitting their bid chain to the auctioneers.     

Can we prevent the gaming of ramp constraints?

Some electric power markets allow bidders to specify constraints on ramp rates for increasing or decreasing power production. We show in a small example that a bidder could use an overly restrictive constraint to increase profits, and explore the cause by visualizing the feasible region from the linear program corresponding to the power auction. We propose three penalty approaches to discourage bidders from such a tactic: two based on the duality theory of linear programming (LP) and the other based on social cost differences caused by ramp constraints. We evaluate the approaches using a simplified scaled model of the California power system, with actual 2001 California demand data.     

Multiagent System Simulations of Treasury Auctions

This study uses a multiagent system to determine which payment rule provides the most revenue in treasury auctions. The agents learn how to bid using straightforward bid adjustment rules that are based on impulse balance learning. The market model encompasses the when-issued, auction, and secondary markets, as well as bidding constraints for primary dealers. I find that when the number of primary bidders is less than 13 (Canada) the Discriminatory payment rule is revenue superior to the Uniform payment across most market price spreads. When the number of primary bidders is greater than 14 (United States), Uniform payment is revenue superior to Discriminatory payment for all market price spreads. In general, revenue increases with the minimum bid constraint and with the number of primary dealers for Uniform, Average, and Vickrey payment rules.      

基于区块链的密封式投标拍卖方案

随着互联网技术的飞速发展,传统拍卖正逐渐转变为电子拍卖,其中隐私保护越来越受到关注。针对当前电子投标拍卖系统中出现的问题,如竞买人隐私存在被泄露的风险、第三方拍卖中心的费用昂贵、第三方拍卖中心可能与竞买人勾结等,提出一种基于区块链智能合约技术的密封式投标拍卖方案。该方案充分利用区块链的去中心化、防篡改和可信赖性等特征构建了一个无第三方的拍卖环境,并通过区块链上的安全保证金策略约束竞买人的行为,从而提高密封式电子拍卖的安全性。同时该方案利用Pedersen承诺保护竞买人的竞拍价格不被泄露,并通过Bulletproofs零知识证明协议验证中标价格的正确性。安全性分析和实验结果表明,提出的拍卖方案满足安全性要求,各个阶段的时间消耗均在可接受范围内,满足日常拍卖要求。     

基于环签名的电子拍卖方案

在拍卖过程中如何保护投标者隐私和身份以及防止中标者反悔是设计安全电子拍卖系统的关键技术.该方案满足投标者的无条件匿名性、健壮性、中标者的不可抵赖性和公开验证性等一般安全性要求外,对可信第三方的依赖小,安全性高.基于环签名技术,提出了一种电子拍卖方案.     

一个新的分布式安全电子拍卖协议

基于Shamir的（t＋1,n）门限方案和公钥加及数字签名提出一个适于分布式松耦合发布／预约系统使用的安全电子拍卖协议。协议除满足了安全分布式拍卖的基本需求外,还保证了代理拍卖服务器的不可否认性及投标者的匿名性。与先前工作相比,新协议具有较多的安全特性,而且更适合于分布式大规模拍卖。松耦合发布预约结构广泛使用于可扩展 自适应的分布式系统中,它的灵活性使之为许多应用所采用。但是,在不安全的通信环境中,这种结构缺乏容错性和安全支持,新协议可以在分布式松耦合发布／预约系统中实现安全性和容错性,同时具有适当的运行效率。最后,我们对协议设计的正确性和效率进行了详尽分析。     

How to obtain full privacy in auctions

Privacy has become a factor of increasing importance in auction design. We propose general techniques for cryptographic first-price and (M+1)st-price auction protocols that only yield the winners' identities and the selling price. Moreover, if desired, losing bidders learn no information at all, except that they lost. Our security model is merely based on computational intractability. In particular, our approach does not rely on trusted third parties, e.g., auctioneers. We present an efficient implementation of the proposed techniques based on El Gamal encryption whose security only relies on the intractability of the decisional Diffie—Hellman problem. The resulting protocols require just three rounds of bidder broadcasting in the random oracle model. Communication complexity is linear in the number of possible bids.