Private From Whom? Minimal Information Leakage in Auctions

Abstract

In many auctions, bidders may value keeping their private information hidden from the auctioneer or other bidders. Yet information must be conveyed to conduct an auction. Among deterministic bilateral communication protocols, revealing less information to bidders requires revealing more information to the auctioneer, and vice versa. A protocol implementing a given social choice rule is on the Privacy Frontier if no alternative protocol reveals less to both bidders and the auctioneer. For first-price auctions, the descending protocol and the sealed-bid protocol are on the Privacy Frontier. For second-price auctions, the ascending protocol and the ascending-join protocol are on the Privacy Frontier, but the sealed-bid protocol is not. We provide sufficient conditions for a protocol to be on the Privacy Frontier and devise alternative protocols allowing a designer to flexibly balance different dimensions of privacy.

50 pages