Incentive-Compatible Collusion-Resistance via Posted Prices

2024-12-30

AI Summary

This paper investigates collusion-resistant mechanism design for transaction fee mechanisms, aiming to simultaneously satisfy incentive compatibility and individual rationality while preventing price manipulation via secret collusion. It innovatively formalizes collusion resistance by internalizing incentive compatibility and individual rationality—both for colluding participants—as core definitional requirements. Using game-theoretic modeling, mechanism design principles, and optimal auction analysis—including both regular and non-regular value distributions—the paper rigorously characterizes the necessary and sufficient structural conditions for strongly collusion-resistant mechanisms. It establishes that, in the single-bidder setting, only posted-price mechanisms satisfy this strong robustness requirement. Furthermore, it quantifies the fundamental trade-off between social welfare and platform revenue, proving the existence of a critical price threshold and revealing the geometric structure of the feasible solution space.

Technology Category

• Game Theory and Economic Paradigms: Mechanism Design
• Multiagent Systems: Mechanism Design
• Search and Optimization: Learning to Search

Application Category

• Economics, Online Markets and Human Computation: Incentives in network design for Web infrastructures and ecosystems
• Responsible Web: Social and technical mechanisms of refusal for web technologies and applications
• Security and Privacy: Large-scale security measurements

Abstract

We consider a refinement to the notions of collusion-resistance in transaction fee mechanisms. In particular, we require that the collusion is by itself incentive-compatible and individually rational to all of its participants. We then study the structural properties of these notions, and importantly, characterize the class of collusion-resistant and incentive-compatible transaction fee mechanisms in the single bidder case, and show that this is exactly the class of posted-price where the price is not too prohibitive. We analyze welfare and revenue implications, as well as the shape of the solution space, for both regular and non-regular distributions.

Problem

• Transaction Fee Rules
• Price Manipulation
• Fairness

Innovation

• Improved Transaction Fee Rules
• Prevention of Collusion
• Fairness and Efficiency in Single Buyer Scenario