Central Auction Research Articles

SBRAC: Blockchain-based sealed-bid auction with bidding price privacy and public verifiability

Electronic auction (e-auction) has become one of the most popular approaches to allocate resources or services in contemporary society because of removing physical limitations of traditional auctions. The rapid expansion of e-auction enhances work efficiency but incurs some new and distinctive challenges such as low-robustness, data privacy, and lack of trust. To address the above concerns, various auction designs have been proposed by researchers from the academic and industrial circles. However, most of them fail in simultaneously achieving decentralization (i.e. auctioneer-free), privacy-preserving (i.e. bids privacy), collusion-resistance, and secure-channel free. In this paper, we present an effective smart contract-based verifiable privacy-preserving sealed-bid reverse auction scheme, which not only has no need for trusted third parties, but also achieves robustness and privacy protection of losing bids even in the face of overwhelming collusion. In this scheme, the central auctioneer is replaced with some carefully designed smart contracts for decentralization, while zero-knowledge proof and anonymous veto networks are used to avoid the secret communication channel, support the public verifiability and detect the malicious behaviors of bidders. More practically, the complexity of the designed scheme is independent of the number of bidders. Finally, we implement a prototype of our design based on a locally simulated Ethereum test network. The extensive experimental results demonstrate the scheme is the high efficiency and practicality.

Blockchain-enabled feedback-based combinatorial double auction for cloud markets

The fast-growing cloud computing market puts tremendous provisioning pressure on cloud service providers. Instead of keeping investing in costly cloud infrastructures, trading resources among different cloud service providers is another cost-effective way to expand the capacity. The key is to design an effective market-based mechanism to facilitate resource trading and motivate high-quality service provisioning. This paper proposes a distributed Feedback-based Combinatorial Multi-unit Double Auction mechanism backed by blockchain to establish a cloud resource market that not only produces high social welfare but also motivates participants to provide high-quality service. We first design an improved greedy allocation mechanism with a novel sorting method to achieve high social welfare. Then we propose a feedback-based second-price pricing mechanism to limit strategic manipulation. Finally, we design a feedback system combined with the auction mechanism to motivate high-quality service provisioning. All these mechanisms are implemented in the form of smart contracts on a consortium blockchain which guarantees the effectiveness of the feedback system and eliminates the dependence on a central auctioneer. Theoretical analysis demonstrates that the proposed auction mechanism maintains budget balance, individual rationality, truthfulness on the buyer side and computational efficiency. In comparison with other popular mechanisms, extensive experiments are conducted to demonstrate higher efficiency of the allocation mechanism, good limitation on strategic manipulation of the pricing mechanism and effectiveness of the feedback system.

Walrasian equilibria from an optimization perspective: A guide to the literature

AbstractAn ideal market mechanism allocates resources efficiently such that welfare is maximized and sets prices in a way so that the outcome is in a competitive equilibrium and no participant wants to deviate. An important part of the literature discusses Walrasian equilibria and conditions for their existence. We use duality theory to investigate existence of Walrasian equilibria and optimization algorithms to describe auction designs for different market environments in a consistent mathematical framework that allows us to classify the key contributions in the literature and open problems. We focus on auctions with indivisible goods and prove that the relaxed dual winner determination problem is equivalent to the minimization of the Lyapunov function. This allows us to describe central auction designs from the literature in the framework of primal‐dual algorithms. We cover important properties for existence of Walrasian equilibria derived from discrete convex analysis, and provide open research questions.

Bank Demand for Central Bank Liquidity: The Impact of Bid Shading and Interbank Markets

We develop a model in which banks bid for liquidity provided by the central bank in fixed and variable rate auctions, considering liquidity injections and extractions as well as the impact of a subsequent interbank market. We derive the equilibrium demands of banks establishing the prevalence of bid shading and show that fixed and variable rate tenders lead to the same allocation in equilibrium. We also investigate the impact the central bank auction has on the subsequent interbank market and find that while lending in the interbank market is reduced, the interest rates are moving in the desired direction. The impact of monetary policy on banks located in the core and the periphery of the interbank network are different, giving rise to the prospects of distributional effects of monetary policy.

Central Counterparty Auction Design

We analyze the role of auctions in managing the default of a clearing member in a generic central counterparty (CCP). We first consider three established alternative sealed bid auction formats in which clearing members simultaneously submit bids for a defaulting clearing member’s portfolio: first price without penalty, first price with penalty, and first price with budget constraints. Under our assumptions regarding bidders’ behaviour, although the revenue of the portfolio by the CCP might be the same for these auction formats mentioned above, there could be significant differences in the externalities arising from each of them. Additionally, this paper considers how mechanisms to incentivize competitive bidding could, in some circumstances, have adverse implications for financial stability by inefficiently distributing losses to surviving clearing members. In response to these potential adverse implications, we propose a fourth auction type — second price with loss sharing — which takes into account a bidder’s consideration that may bear part of the CCP’s losses.

Proposed Smart Market Design for Sediment Discharge

AbstractSediment discharge from erosion, urban runoff, and construction can cause environmental degradation. Governments try to regulate sediment, but the regulatory approach is costly to land owners. In principle, a market-based system could reduce costs, but the associated transaction costs are far too high, because market participants must find trading partners, negotiate, and seek government approval. This paper proposes a smart market design with an associated market clearing model for sediment discharge. Market participants offer and bid for tradable discharge allowances to a central auctioneer. The allowances correspond to kilograms of sediment discharge per year, as estimated by an erosion model. The auctioneer then uses a linear program to price and allocate sediment allowances in a given catchment. Participants do not trade bilaterally, but rather through a central pool, reducing transaction costs. The market design uses the relevant hydrological data, quantifies environmental effects explicitly...

On bidding algorithms for a distributed combinatorial auction

Combinatorial auctions CAs are a great way to solve complex resource allocation and coordination problems. However, CAs require a central auctioneer who receives the bids and solves the winner determination problem, an NP-hard problem. Unfortunately, a centralized auction is not a good fit for real world situations where the participants have proprietary interests that they wish to remain private or when it is difficult to establish a trusted auctioneer. The work presented here is motivated by the vision of distributed CAs; incentive compatible peer-to-peer mechanisms to solve the allocation problem, where bidders carry out the needed computation. For such a system to exist, both a protocol that distributes the computational task amongst the bidders and strategies for bidding behavior are needed. PAUSE is combinatorial auction mechanism that naturally distributes the computational load amongst the bidders, establishing the protocol or rules the participants must follow. However, it does not provide bidders with bidding strategies. This article revisits and reevaluates a set of bidding algorithms that represent different bidding strategies that bidders can use to engage in a PAUSE auction, presenting a study that analyzes them with respect to the number of goods, bids, and bidders. Results show that PAUSE, along with the aforementioned heuristic bidding algorithms, is a viable method for solving combinatorial allocation problems without a centralized auctioneer.

Dynamic Multi-Band Sharing in Cognitive Radio Networks: A Market Game Approach

The traditional spectrum auctions require a central auctioneer. Then, the secondary users (SUs) can bid for spectrum in multiple auction or sealed auction way. In this paper, we address the problem of distributed spectrum sharing in the cognitive networks where multiple owners sell their spare bands to multiple SUs. Each SU equips multi-interface/multi-radio, so that SU can buy spare bands from multiple owners. On the other hand, each owner can sell its spare bands to serval SUs. There are two questions to be addressed for such an environment: the first one is how to select bands/the owners for each SU; the second one is how to decide the competitive prices for the multiple owners and multiple SUs. To this end, we propose a two-side multi-band market game theoretic framework to jointly consider the benefits of all SUs and owners. The equilibrium concept in such games is named core. The outcomes in the core of the game cannot be improved upon by any subset of players. These outcomes correspond exactly to the price-lists that competitively balance the benefits of all SUs and owners. We show that the core in our model is always non-empty. When the measurement of price takes discrete value, the core of the game is defined as discrete core. The Dynamic Multi-band Sharing algorithm (DMS) is proposed to converge to the discrete core of the game. With small enough measurement unit of price, the algorithm can achieve the optimal performance compared with centralized one in terms of the system utility.

An algorithmic game theory study of wholesale electricity markets based on central auction

The deregulation of the electricity markets produced significant economic benefits. Improving their efficiency is a prominent scientific challenge. We focus on wholesale electricity markets, in whi...

An algorithmic game theory study of wholesale electricity markets based on central auction

The deregulation of the electricity markets produced significant economic benefits. Improving their efficiency is a prominent scientific challenge. We focus on wholesale electricity markets, in which generators sell electricity to a public agency by

Commercial Bryophyte Harvesting in the Monarch Butterfly Biosphere Reserve, Sierra Chincua, Michoacan, Mexico

Abstract Each Christmas season, the abundance of terrestrial bryophytes in the Abies-dominated forests of the Sierra Chincua, part of the Monarch Butterfly Biosphere Reserve, attracts moss gatherers. Bryophyte mats are harvested as ornamentals, packed, and sold at the central auction of Mexico City. In 1996, we followed a group of about 10 family members in this activity and documented economic and ecological aspects. During the season they removed in total nearly 50 tons of fresh weight of bryophytes from the forest floor that was sold for approximately $3,500 USD, leaving behind a mosaic of gaps of bare soil in the mossy layer. The average gap size was 0.48 m2 and extraction intensity varied between 0.5 and 4.1% of the total surface area (2.14% on average). In addition, over 11,000 Abies seedlings were unintentionally removed. We are conceive that the Mexican norm for bryophyte harvesting is not in line with current practices and we recommend the inclusion of guidelines for patch size, and that harveste...