Privacy Preserving Auctions

Ran Eilat, Kfir Eliaz and Xiaosheng Mu

No 18662, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: In many auction settings the auctioneer must disclose the identity of the winner and the price he pays. We characterize the auction that minimizes the winner's privacy loss among those that maximize total surplus or the seller's revenue, and are strategy-proof. Privacy loss is measured with respect to what an outside observer learns from the disclosed price, and is quantified by the mutual information between the price and the winner's willingness to pay. When only interim individual-rationality is required, the most privacy preserving auction involves stochastic ex-post payments. Under ex-post individual rationality, it is the second-price auction with deterministic payments.

JEL-codes: D44 D82 (search for similar items in EconPapers)
Date: 2023-12
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