Beyond Quasi-linear Utility: Strategy/False-Name-Proof Multi-unit Auction Protocols

We develop strategy/false-name-proof multi-unit auction protocols for non-quasi-linear utilities. One almost universal assumption in auction theory literature is that each bidder has quasi-linear utility. However, in practice, a bidder might have some kind of financial condition including budget constraints. The Vickrey-Clarke-Groves (VCG) protocol is designed to be truthful under the quasi-linear assumption and will break down if this assumption does not hold. We show with a simple modification, the VCG can handle non-quasi-linear utilities. However, there are possibilities that the modified VCG sacrifices significant efficiency loss, since it only uses the gross utilities for determining tentative allocation and payments. Also, it has been shown that the VCG is vulnerable to a false-name bid which is a new type of cheating on the Internet. To improve efficiency without collecting the entire utility functions and guarantee false-name-proofness, we develop a false-name-proof open ascending auction protocol.

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