Robust Double Auction Protocol against False-name Bids
Makoto Yokoo, Yuko Sakurai, and Shigeo Matsubara
21st International Conference on Distributed Computing Systems
Internet auctions have become an integral part of
Electronic Commerce (EC) and a promising field for applying agent
technologies. Although the
Internet provides an excellent infrastructure for large-scale auctions,
we must consider the possibility of a new type of cheating,
i.e., a bidder trying to profit from submitting several bids under
fictitious names (false-name bids).
Double auctions are an important subclass of auction protocols that
permit multiple buyers and sellers to bid to exchange a good, and
have been widely used in stock, bond, and foreign exchange markets.
If there exists no false-name bid, a double auction protocol called
PMD protocol has proven to be dominant-strategy incentive compatible.
On the other hand, if we consider the possibility of false-name
bids, the PMD protocol is no longer dominant-strategy incentive compatible.
In this paper, we develop a new double auction protocol called the Threshold
Price Double auction (TPD) protocol, which is dominant-strategy
incentive compatible even if participants can submit false-name bids.
The characteristics of the TPD protocol is that the number of trades
and prices of exchange are controlled by the threshold price.
Simulation results show that this protocol can achieve a social
surplus that is very close to being Pareto efficient.