Sealed‐bid auction: a cryptographic solution to bid‐rigging attack in the collusive environment

Abstract

AbstractSealed‐Bid auction is an efficient and rational way to establish the price and trading goods in the open market. However sealed‐bid auctions are subject to bid‐rigging attack. Receipt‐free mechanisms are proposed to prevent bid‐rigging. So far, all the proposed receipt‐free mechanisms are based on strict assumptions: i) The channel between bidders and the auction authorities (like auctioneer, sealer, registering authority etc.) must be untappable, 2) the authorities are assumed to be honest (not colluded), hence ensure privacy and anonymity of bids. Moreover, the existing receipt‐free mechanisms are bandwidth intensive (estimated difference between the minimum and maximum bidding price). In this paper, we present a receipt‐free sealed‐bid auction mechanism which can withstand public channel and colluded authorities. The proposed mechanism can work even under the situation where all the authorities except one are colluded. Unlike the existing mechanisms, the computational complexity of the proposed mechanism is independent of the bandwidth and only depends on the number of valid bids. The auction mechanism requires O(mlogm) computational steps to resolve the winner, where m is the number of valid bids in the system. Copyright © 2015 John Wiley & Sons, Ltd.