From: AAAI Technical Report WS-02-06. Compilation copyright © 2002, AAAI (www.aaai.org). All rights reserved. Price-oriented, Rationing-free Protocol: Guideline for Designing Strategy/False-name Proof Auction Protocols Makoto Yokoo and Yuko Sakurai Kenji Terada NTTCorporation NTTCorporation NTr CommunicationScience Laboratories NTTInformation Sharing Platform Laboratories 2-4 Hikaridai, Seika-cho 3-9-11 Midori-cho Soraku-gun, Kyoto 619-0237 Japan Musashino, Tokyo 180-8585, Japan email: {yokoo,yuko}@cslab.kecl.ntt.co.jp email: terada.kenji @lab.ntt.co.jp http’J/www.kecl.ntt.co.jp/csl/ccrg/members/{yokoo, yuko} Abstract to profit from submitting false bids madeunder fictitious names, e.g., multiple e-mail addresses (Sakurai, Yokoo, & Matsubara 1999; Yokoo, Sakurai, & Matsubara 2001b). Sucha dishonestaction is very difficult to detect since identifying each participant on the Internet is virtually impossible. Comparedwith collusion (Klemperer1999), a falsenamebid is easier to execute since it can be done by someone acting alone. Wecan consider false-name bids a very restricted subset of general collusion. Yokooet al. have been conducted a series of works on false-name bids. Their results can be summarizedas follows. Weidentify a distinctive class of combinatorial auctionprotocols called a Price-oriented, Rationing-free(PORF) protocol, whichcan be used as a guideline for developing strategy/false-name proof protocols. APORF protocol is automaticallyguaranteedto be strategy-proof,i.e., for each agent,declaringits true evaluationvaluesis an optimalstrategyregardlessof the declarationsof other agents. Furthermore,if a PORF protocolsatisfies additionalconditions,the protocolis also guaranteed to be false-name-proof, that is, it eliminatesthe benefits fromusingfalse-name bids, i.e., bids submittedundermultiplefictitious namessuch as multiple e-mailaddresses.ForIntemetauctionprotocols,beingfalsename-proof is importantsince identifyingeachparticipanton the Intemetis virtuallyimpossible. Thecharacteristics of a PORF protocol are as follows. For each agent, the price of eachbundleof goodsis presented. Thisprice is determined basedon the declaredevaluationvalues of otheragents,whileit is independent of its owndeclaration. Then,eachagent can choosethe bundlethat maximizes its utility independently of the allocationsof otheragents(i.e., mOoning-free).Weshowthat an existing false-name-proof protocol can be representedas a PORF protocol. Furthermore,wedevelopa newfalse-name-proofPORF protocol. ¯ The generalized Vickrey auction protocol (GVA)(Varian 1995), whichis strategy-proof, individually rational, and Pareto efficient, if there exists no false-namebid, is no longer strategy-proof whenfalse-namebids are possible, i.e., the GVA is not false-name-proof(Sakurai, Yokoo, Matsubara 1999; Yokoo,Sakurai, & Matsubara 2000). ¯ There exists no false-name-proof combinatorial auction protocol that simultaneously satisfies Pareto efficiency and individual rationality (Sakurai, Yokoo,&Matsubara 1999; Yokoo,Sakurai, & Matsubara2000). Introduction Internet auctions have becomean especially popular part of Electronic Commerce(EC). Amongvarious studies related to Interact auctions, those on combinatorial auctions have lately attracted considerable attention (Fujishima, LeytonBrown, & Shoham1999; Klemperer 1999; Sandholm 1999; Lehmann, O’Callaghan, & Shoham1999). Although conventional auctions sell a single item at a time, combinatorial auctions sell multiple items with interdependentvalues simultaneously and allow the bidders to bid on any combination of items. In a combinatorial auction, a bidder can express complementary/substitutable preferences over multiple bids. By taking into account complementary/substitutable preferences, we can increase the participants’ utilities and the revenueof the seller. However,the possibility of a newtype of cheating called false-namebids has been pointed out, i.e., an agent maytry Copyright© 2002, American Associationfor Artificial Intelligence(www.aaai.org). All rights reserved. 119 ¯ A false-name-proofcombinatorial auction protocol called the LDSprotocol (Yokoo, Sakurai, & Matsubara 2001b) and a false-name-proofmulti-unit auction protocol called the IR protocol (Yokoo, Sakurai, & Matsubara 2001c) were developed. Developinga strategy/false-name proof protocol has been a difficult task. In this paper, we identify a distinctive class of combinatorial auction protocols called a Priceoriented, Rationing-free (PORF)protocol. The notion a PORFprotocol can be used as a guideline for developing strategy/false-name protocols. Morespecifically, if a protocol can be represented as a PORFprotocol, it is automatically guaranteed to be strategy-proof. Furthermore, if a PORF protocol satisfies additional conditions, it is also guaranteed to be false-name-proof. In a PORF protocol, for each agent, the price of each bundle of goods is presented. This price is determined based on the declared evaluation values of other agents, while it must be independent of its own declarations. Then, each agent can choosethe bundle that maximizesits utility based on the presented prices, independentlyof the allocations of other agents. A PORFprotocol is different from a normal fixed-price mechanism,where fixed prices of goods/bundles are determined, and agents choose one or a set of bundles they are willing to buy, then the auctioneertries to ration the allocation, e.g., to choosewinners by using a lottery. In a PORF protocol, the auctioneer doesnot try to ration the allocation, i.e., if an agent is willing to buya bundle,the agent is guaranteed to obtain the bundle regardless of the allocations of other agents. In a PORF protocol, the auctioneer must carefully determinethe prices so that a feasible allocation, i.e., the allocation wherethe samegoodis not allocated to different agents, can be obtained without using a lottery. Weshow that various protocols, including the existing false-name-proof protocol called LDSprotocol (Yokoo, Sakurai, & Matsubara2001b) can be represented as a PORF protocol. Furthermore, we develop a new false-name-proof PORFprotocol and compareit with the LDSprotocol. Preliminaries Here, we introduce several basic terms and concepts. Weconcentrate on private value auctions (Mas-Colell, Whinston, & Green 1995). In private value auctions, each agent knowswith certainty its ownevaluation values of goods, which are independent of the other agents’ evaluation values. Wedefine an agent’s utility as the difference betweenthis private value of the allocated bundle, i.e., a set of goods, and its payment.Such a utility is called a quasi-linear utility (Mas-Colell, Whinston,&Green 1995). These assumptions are commonlyused for makingtheoretical analyses tractable. Formally, we assumethat for each agent i, its type Oi is drawnfrom a set O. The utility of agent i, whoobtains bundle B and an amountof moneyt~, is represented as v ( B, Oi) +ti, wherev ( B, Oi) representsthe private value of agent i for bundle B. In a traditional definition (Mas-Colell, Whinston, Green1995), an auction protocol is (dominant-strategy) incentive compatible(or strategy-proof)if biddingthe true private values of goods is a dominantstrategy for each agent, i.e., an optimal strategy regardless of the actions of other agents. Therevelation principle states that in the design of an auction protocol we can restrict our attention to incentive compatible protocols without loss of generality (MasColell, Whinston, & Green 1995; Yokoo, Sakurai, & Matsubara 2000). In other words, if a certain property (e.g., Pareto efficiency) can be achieved using someauction protocol in a dominant-strategyequilibrium, i.e., a combination of dominantstrategies of agents, the property can also be achieved using an incentive compatibleauction protocol. In this paper, we extend the traditional definition of incentive compatibility so that it can address false-namebid manipulations, i.e., we define that an auction protocol is (dominant-strategy)incentive compatibleif bidding the true private values of goodsby using the true identifier is a dominant strategy for each agent. To distinguish the traditional and extendeddefinition of incentive compatibility, we refer to the traditional definition as strategy-proof and to the extended definition as false-name-proof. Wesay an auction protocol is Pareto efficient whenthe sumof all participants’ utilities (including that of the auctioneer), i.e., the social surplus, is maximized in a dominantstrategy equilibrium. An auction protocol is individually rational if no participant suffers any loss in a dominantstrategy equilibrium, i.e., the paymentnever exceeds the evaluation value of the obtained goods. In a private value auction, individual rationality is indispensable; no agent wants to participate in an auction whereit might be charged moremoneythan it is willing to pay. Therefore, in this paper, werestrict our attention to individually rational protocols. Price-oriented, Rationing-free Protocol Weshow the overview of a PORFprotocol. ¯ Weassume there is a set of goods M= {1, 2,..., m}. For each bundle B C M, each agent declares its (not necessarily true) evaluation value. ¯ For each agent i, the price of each bundleB is calculated. This price can be a differentialprice, i.e., the price of the samebundlecan vary for different agents. Also, the price for bundleB does not necessarily haveto be additive, i.e., the sumof the prices of the goodsin the bundle. The price can be super-additive (morethan the sum) or sub-additive (less than the sum). ¯ Theprice for agent i is totally independentof its owndeclared evaluation values, while it is basedon the declared evaluation values of the agents other than i. ¯ For agent i, a bundlethat maximizes its utility is allocated underthe given prices. If there exist multiple bundlesthat maximizei’s utility, the auctioneer can coordinate the allocation and choosesa feasible allocation, i.e., the allocation wherethe samegoodis not allocated to different agents. ¯ Unless agent i is totally indifferent amongmultiple bundies, the auctioneer does not coordinate the allocation, i.e., the bundle allocated to agent i is determinedindependently of the allocations of the other agents. Wecall this propertyrationing-free. Formally, a PORFprotocol can be described as follows. ¯ Eachagent i declares its (not necessarily true) type/~i. assumean agent can declare multiple types using multiple identifiers. ¯ Weassume a PORFprotocol is an anonymousprotocol, where permuting agents’ identifiers does not change the outcome. Let us represent a set of agents other than agent i as X and the set of declared types of X as Ox. The price of agent i for bundle B is represented as Pn(ex), i.e., the function of ex. For agent i whodeclares its type as 0i, the auctioneer chooses a bundle B*, where B* = axgmaxn v(B, 0i) PB(OX). Such a bundle might not be determined uniquely. Let us represent the set of such bundles as SB~.. The auctioneer determines an allocation, g = (B1, B2,...), where Bi SB* and fo r al l i 120 j, Bi O Bj = 13. If the prices are determined appropriately, we can guarantee that the auctioneer is able to choosesuch a feasible allocation. If there exists no false-namebid, i.e., an agent can use only one identifier, it is obvious that a PORF protocol is strategy-proof. For agent i, its price for a bundle is determinedindependentlyof its declared type. Also, the protocol is rationing-free, i.e., the bundleallocated to agent i is determined so that its utility is maximized,independently of the allocations of other agents. Therefore,over-declaringits evaluation value for bundle B, so that other agents’ prices for bundle B would increase and they would give up the idea of buyingB, is totally useless. Onthe other hand, the auctioneer must set the prices appropriately so that he/she can choosea feasible allocation without rationing. Wecan see an interesting relationship between a PORFprotocol and a traditional protocol, where a feasible allocation is determinedfirst, and then the payment of each agent is determinedbasedon the allocation. In a traditional protocol, it is obviousthat the obtainedallocation is feasible, but the auctioneer must determinethe paymentappropriately so that the protocol is strategy-proof. In a PORF protocol,it is obviousthat the protocolis sta’ategy-proof,but the auctioneer must determine prices appropriately so that he/she can choosea feasible allocation without rationing. agent i whenagent i does participate and obtains bundle/3. In the GVA,we can assumeeach agent is required to pay the decreased amountof social surplus for other agents caused by its participation. The GVAcan be represented as a PORFprotocol, where PB(OX),i.e., the price of agent i for bundle B, is represented as follows. PB(OX) = V*(X, M) - V*(X, M It is straightforwardto showthat the auctioneer can choosea feasible allocation, whichalso maximizesthe social surplus, in this PORF protocol. Bundle-size Ordered Protocol Wedescribe a new PORFprotocol that is false-name-proof. Wecall this protocol Bundle-size Ordered(BSO)protocol. OverviewThe overview of the BSOprotocol is as follows. ¯ The auctioneer determines the reservation price rj for each goodj, i.e., the auctioneer will not sell goodj for less than rj. For simplicity, we assume that all goods have the same reservation price r. Relaxing this condition is rather straightforward. ¯ Theprice of agent i for bundle/3is determinedas follows. Let us assumek is the size of bundle B, i.e., the number of goods in/3. Weassumethe reservation price of bundle /3 isr x k. Let us assume/3~represents the bundle that satisfies the followingconditions. 1. There exists at least one commongood between/3 and BI, i.e.,/3 O/3’ ~ O. 2. For agent j ¢ i, whosedeclared type is 6, v(B’, ~) r x k~, wherek’ is the size of Bt, i.e., there exists an agent whoseevaluation value for/3’ is larger than (or equal to) the reservation price of/3~. 3. k~ is largest within the bundles that satisfy the above two conditions. 4. v(/3’, ~.) is largest within the bundlesthat satisfy the abovethree conditions. Examples of PORF Protocols GVA In the Vickreyauction protocol for a single-item single-unit auction, the agent whodeclares the highest evaluation value obtains the goodby payingthe price that is equal to the second highest evaluation value. This protocol can be described as a PORF protocol as follows. For agent i, the price of the goodis the highest evaluationvalue of agents other than i. It is clear that only one agent is willing to buythe goodexcept for the case of randomtie-breaking, wherethe utility of the winneris 0. In the generalized Vickrey auction protocol (GVA)(Varian 1995), whichcan be used for a combinatorialauction, the goodsare allocated in a waythat maximizesthe obtained social surplus, i.e., the sumof all participants’utilities including the auctioneer. To simplify the protocol description, we introducethe following notation. For a set of agents X and a set of goods S, we define V*(X, S) as the sum of the evaluation values of X when S is allocated optimally amongX. To be precise, for a possible allocation g ----- (/31,/3%...), where Uj~x Bj = S and for all x # y, B~ n/3v = O, V*(X, S) is defined as max9 ~-~d~xv(/3j, Oj), where~ is the declared type of agent j. The paymentof agent i whoobtains bundle/3 is represented as follows, whereX is the set of agents other than i: V*(X, M) - V*(X, M \ The first term of this formula represents the optimal social surplus whenagent i does not participate in the auction. Thesecondterm represents the optimal social surplus except Now,the price of agent i for bundle/3 is defined as follows: when k~ > k: oo, when k’ = k: v(B’, ~), whenk~ < k: r x k. In short, whenanother agent is willing to pay morethan the reservation price for bundle B~, whichis larger than/3 and conflicting with B, i.e., B and B’ have a common good, then agent i cannot buy/3. If the sizes are the same, the agent declaring the highest evaluation value can buy the bundle with the secondhighest evaluation value. If nobodyis willing to pay morethan the reservation price for a conflicting bundle with the sameor larger size, then the agent can buy the bundleat the reservation price. Example1 Let us assume there are three goods a, b, and c, and the reservation price for each is 100. There are two 121 agents, agent 1 and agent 2, whosetypes are 01,02, respectively. Theevaluationvalue for a bundlev( B, Oi ) is determinedas follows. O1 02 (a) 0 0 (b) 0 110 (c) (a,b) 0 210 110 110 (b,c) (a,c) 0 0 110 110 210 110 meve1111 abcd, j level 2 level 3 level 4 [ {(a,b,c)}, {(b,c,d)}, {(a,c,d)} [ {(a,b),(c,d)}, {(a,c),(b,d)}, {(a,d),(b,c)} [ {(a),(b),(c),(d)} Figure 1: Exampleof Leveled Division Sets These evaluation values meanthat agem1 needs both a and b at the sametime, while agent 2 needseither b or c but not both at the sametime. In this case, the price of agent I for bundle(a, b), i.e., P(a,b)({ 02} ), 200, i.e ., the reservation price, the price of agent2 for b, i.e., P(b)( { 01}), is oodue agent I’s evaluationvalue for (a, b), andthe price of agent2 for¢ i.e., P(e)({01}), is 100, i.e,, the reservationprice. As a result, agent 1 obtains bundle (a, b) for 200 and agent 2 obtains c for 100. Example2 The numberof goods and reservation prices are identical to Example1. Thereexist three agents whosetypes are as follows. (a) (b) (c) (a,b) (b,c) (a,c) 0 0 0 210 0 0 210 01 0 0 0 0 205 0 02 205 0 0 150 150 03 0 150 150 Agent 1 needs both a and b at the same time and agent 2 needs both b and c at the same time, while agent 3 needs only a In this case, the price of ageml for bundle(a, b) 205due to agent 2’s evaluation value for (b, c), the price agent 2for bundle (b, e) is 210 due to agent l’s evaluation value for (a, b), andthe price of agent 3for c is co due agent 2"s evaluation value for (b, c). As a result, agent obtains bundle(a, b) for 205, while c cannotbe allocated. Allocation Feasibility Here, we showthat the auctioneer can alwayschoosea feasible allocation in the BSOprotocol. Morespecifically, we showthat for any bundle that contains gooda, there exists at mostone agent whois willing to buy such a bundle, except whenmultiple agents are willing to buy the bundlebut the utilities of these agents are 0. If the utility of an agent is 0, the agent is indifferent betweenobtaining and not obtainingthe bundle. Therefore, the auctioneer can coordinate and choosea feasible allocation. First, let us choosethe bundleBm~xthat satisfies the followingconditions. 1. B,,,,,x contains gooda. 2. For agent i, whosetype is 0i, v(Braax, Oi) > r x kmax, where kma x is the size of Bmax . We assumeeach agent is declaringits true type since the protocolis strategy-proof. 3. k,n~, is largest within the bundlesthat satisfy the above twoconditions. 4. v(Bmaz,Oi) is largest within the bundles that satisfy the abovethree conditions. For agent j where j # i, the price of agent j for bundle B that contains a is determinedas follows. Let us represent the size of B as k. If v(B, 0j) _> r x k, by this wayof choosing Bmaz, kmaz >_ k holds. 122 whenkr,,a~ > k: co, when kmax= k: v(Brnax, Oi), whenk,,,~ < k: r x k. Whenkmax > k, it is clear that nobody wants B at this price. Whenk,~x = k, since B,~ is chosen so that v(Bm~,0i) is maximized,the utility of agent j cannot be positive by obtaining B at this price, whenk,,,,~ < k, the utility of agent j cannot be positive since v(B, Oj) < r x LDS Protocol In the LDSprotocol, the auctioneer needs to define not only the reservation price, but also the methodfor dividing goods into bundles. Thisdescription is called a leveled division set. Figure 1 showsan exampleof a leveled division set where there are four goods(a, b, c, and d). Eachlevel contains a set of divisions, wherea division is a set of mutually exclusive bundles. The LDSprotocol basically apply the GVA using divisions from level 1, level 2, and so on, until someagent can afford to buy a bundle by paying more than the reservation price. A leveled division set must be defined so that a union of multiple bundles in one division is alwaysincluded in a division of an earlier level. For example,in level 4 of Figure 1, there is a division {(a),(b),(c),(d)}. Wecan see that all unions of multiple dies, e.g., {(a,b)}, {(a,b,c)}, appear in earlier levels. condition is required to makethe protocol false-name-proof. Please consult (Yokoo,Sakurai, &Matsubara2001b) for details of the LDSprotocol. The LDSprotocol can be described as a PORFprotocol. The price of bundle B for agent i is defined as follows. AssumeB is included in a division of level l. If B is not included in any division, the price is co. Also, let us assume l,mn represents the earliest level, whereanother agent wants to buya bundle in level lm~nby paying morethan the reservation price. when lmin < l: co, whenlmin = l: the price for B is determinedby the same method as the GVA,where possible allocations are restricted by the divisions of level l, whenlmin > l: the reservation price. Dueto space limitations, we omit a detailed explanation, but wecan showthat by using this protocol description, the obtained results are identical to that by the LDSprotocol presented in (Yokoo, Sakurai, &Matsubara2001b). False-name-proof PORFProtocol Weshow that a PORFprotocol is false-name-proof if the protocol satisfies followingtwo additional conditions. monotonleprice increase: Whenthe number of other agents increases, the price of an agent does not decrease. Formally,for any set of agent X, agent i whois not in X, and any bundle B, PB(Ox) <_ PB(OXU {01}) holds. -= f I-°-LDS no sulmr-additiveprice increase: For any mutually exclusive bundles B, B~, /any set of agents X, and agents i, i whoare not in X, PB(OXO {0¢ }) + P/3, (Ox 13 {0i}) PBtm,(Ox)holds. The first term in the left side represents the price of agent i for bundle13, the secondterm in the left side represents the price of agent i I ~, for bundleB and the right side represents the price for bundlet3 u B’ for agent i (or i’) whenagents other than i (or i’) are X. I f -~ I -k / Here, we showthat a PORF protocol that satisfies the above two conditions is false-name-proof. Assumeagent i uses twoidentifiers i, i’. If the agent obtains bundle/7only with one identifier, say, i, then by the condition of monotonic price increase, the price of i for bundle/3 decreases or remains the same when agent i refrains from using another ~. identifieri On the other hand, if the agent obtains bundle t3 under identifier i and bundleB’ underidentifier i’, by the condition of no super-additiveprice increase, if the agent uses a single identifier, the price of B 13 B~ becomessmaller than (or the sameas) the sumof the prices for B and/3’. Whenan agent uses three or more identifiers, by using a similar argumentwe can showthat the agent’s utility increases or at least remains the same when the agent uses onlyone identifier. Now,let us showthat the BSOprotocol satisfies these two conditions. It is obviousthat the protocol satisfies the condition of monotonicprice increase. For the condition of no super-additiveprice increase, it is clear that the conditionis satisfied whenPBt.tB’ ({~X) is the reservationprice, since the price of a bundleis never less than the reservation price. On the other hand, if Pooo, (Ox) is not the reservation price, i.e., it is larger than the reservation price, then, there exists a bundle B’~ that has at least one commongood with B 13 BI, wherethe size of B" is larger than or the sameas B U/3’ and the evaluation value for B’~ of one agent in X is larger than or equal to the reservation price. Therefore, either PB(OxO {Ov}) or PB,(Ox 13 {Oi}) becomesoo, thus the conditionof no super-additive price increase holds. On the other hand, the GVA fails to satisfy both conditions. Therefore, as shownin (Sakurai, Yokoo,&Matsubara 1999; Yokoo,Sakurai, & Matsubara 2001b), an agent can decrease its paymentby using false-names and splitting its bid. Evaluations Wecomparethe obtained social surplus of the BSOprotocol and that of the LDSprotocol using a simulation. For each agent i, we determine bundle/3 required by agent i and v(B, Oi) by the following method. t First, we determinek, whichrepresents the size of bundle B, by using an exponential distribution de(k) = -pk (Fujishima, Leyton-Brown, & Shoham1999). By using 123 <o.1: i 0 ., i , I. i i , , I , 0.5 1 Reservation Price 1.5 Figure 2: Comparisonof Social Surplus this distribution, manysmall bundles are created. The provability that a size k bundleis created is ep times larger than that of a size k + 1 bundle. ¯ Next, we randomly choose k goods included in/3 and choose randomlyv(B, 0~) from within the range of [(1 - q)k, (1 + q)k]. Weassumethat the evaluation values of an agent are all-or-nothing, i.e., the evaluationvalue for a bundlethat does not include all of the goodsin/3 is 0. In the LDSprotocol, the auctioneer must determinea leveled division set. In this evaluation, we construct a leveled divisionset similar to that in Figure1, i.e., at level 1, weput a division that contains a single bundle of mgoods. Then, at level 2, we put m- I divisions, each of whichcontains a bundle of m- 1 goods, and so on. Morespecifically, we put divisions that contain size m- 1 + 1 bundles at level l. If possible, we combinemultiple bundles in a single division, as shownin level 3 and level 4 in Figure 1. By using this method,we can put all small bundles in the leveled division set. Figure 2 showsthe average ratio of the obtained social surplus to the Pareto efficient social surplus by varying the reservation price. In Figure 2, we set the numberof goods m = 100, the numberof agents n = 100, p = 1, and q --0.5. Eachdata point represents the average of 100 problem instances. As shownin Figure 2, by setting the reservation price within the range of [0.75, 0.98], the obtained social surplus of the BSOprotocol can reach 70%of the Pareto efficient social surplus. Onthe other hand, in the LDSprotocol, the obtained social surplus becomesat most 11%. In this problemsetting, most bundles consist of one or two goods, while there are a few bundles with size 7 or 8. Whenthe reservation price is very small, both protocols sell a size mbundle to a single agent. By increasing the reservation price, the BSOprotocol can allocate multiple bun- o I LDSl/ / 1.2 -o- ~0.9 ¯ ~0.7 0.2~ 0"10 0 I / However,as in the case of the GVA,LDS,and BSOprotocols, wecan describe a protocol either as a PORF protocol or as the traditional mannerin whichan allocation of goodsis determined, then the paymentsare calculated based on the allocation. Wecan assume that the description of a PORF protocol is not for an actual implementationbut for a normativeguideline for provingcharacteristics of a protocol. As far as the authors are aware, all knownfalse-nameproof protocols, including the IR protocol (Yokoo, Sakurai, &Matsubara2001c)for multi-trait auctions, can be described as a PORF protocol. Aninteresting open question is whether any false-name-proofprotocol can be described as a PORF protocol that satisfies the aboveadditional conditions. In comparing the LDSand BSOprotocols, we can see that each protocol has its merits and demerits. In the previous section, we assumethat the auctioneer does not have goodknowledgeof the possible evaluation values of agents. Therefore, the auctioneer mustuse a leveled division set that contains all possible small-sized bundles. Onthe other hand, when the auctioneer has good knowledgeof the possible evaluation values of agents, the auctioneer can construct a more specialized leveled division set using the methoddescribed in (Yokoo, Sakurai, &Matsubara 2001a). In this case, the social surplus obtained by the LDSprotocol becomesclose to a Pareto efficient social surplus, whichwould be muchbetter than that of the BSOprotocol. While the LDSprotocol is based on the GVA,the BSO protocol is similar to a greedy protocol for single-minded bidders described in (Lehmann, O’Callaghan, & Shoham 1999). A single-mindedbidder is an agent whois interested in only one particular bundle. In the BSOprotocol, when determiningthe price of an agent, the protocol treats other agents as if they are a collection of single-mindedbidders without considering the substitutable preferences of these agents. \_ \ 0.5 1 Reservation Price 1.5 Figure 3: Comparisonof Revenue dies with different sizes to different agents. Onthe other hand, in the LDSprotocol, even whenthe reservation price increases, the goodsare sold at the level wherebundles contain 7 or 8 goods, thus the LDSprotocol can allocate only a few bundles and the obtained social surplus cannot increase very much. Evaluations Figure 3 showsthe average ratio of seller’s revenue to the revenue obtained by using the GVAassumingthere exists no false-namebids. Parametersettings are identical to Figure 2. Wecan see that trends are almost identical to that of the social surplus, with a notable exception that the ratio can be morethan 1, i.e., the BSOprotocol can obtain a better revenuethat that of the GVA,whenthe reservation prices are set appropriately. Conclusions In this paper, we introducedthe conceptof a Price-oriented, Rationing-free (PORF)protocol. Weshowedthat if a protocol can be represented as a PORFprotocol, the protocol is automatically guaranteed to be strategy-proof. Also, we showedthat if the protocol satisfies additional conditions, the protocol is also guaranteed to be false-name-proof. We showedthat existing protocols, such as the GVAand LDS, can be formalized as PORFprotocols. Furthermore, we developed a new false-name-proof PORFprotocol called the BSOprotocol and compared it with the LDSprotocol. Weshowed that the BSOprotocol can obtain a better social surplus and better revenue than that of the LDSprotocol whenthe auctioneer does not have a goodmodelof possible evaluation values of agents. Discussions Designinga protocol that is guaranteedto be strategy/falsenameproof has beena difficult task. If the protocol can be represented as a PORFprotocol, the protocol is automatically strategy-proof. Furthermore,if the protocol satisfies additional conditions, the protocol is guaranteedto be falsename-proof. Of course, we need to prove that a PORFprotocol can obtain a feasible allocation. However,this tends to be much easier than provinga protocol is false-name-proof,since we can assumeeach agent declares its true type using a single identifier. As for the computationalcost of executing a protocol, a naive implementationof a PORFprotocol requires calculating prices for all bundles of all agents. 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