Class 16: Auctions with Integrity

Class 16: Auctions with Integrity
https://uvammm.github.io/class16

Markets, Mechanisms, and Machines
University of Virginia
cs4501/econ4559 Spring 2019
David Evans and Denis Nekipelov
https://uvammm.github.io/

Transcript

1. MARKETS, MECHANISMS, MACHINES University of Virginia, Spring 2019
   Class 16:
   Auctions with
   Integrity
   7 March 2019
   cs4501/econ4559 Spring 2019
   David Evans and Denis Nekipelov
   https://uvammm.github.io
   

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2. In-Class Auction
   Item for bid: +$1000 for your team’s budget for Project 4
   Your bid is !", virtual dollars from the Project 4 budget
   Auction mechanism:
   winner: highest bid, pays !($), gets $1000
   “loser”: second highest bid, pays !(&), gets nothing
   1
   Auction ends when last late student enters classroom (or at 9:59am).
   Bid by sending a slack message to #inclass: (team, bid) – to be valid, must increase previous bid by at least $1
   

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3. 2
   Auction Result:
   Team 3: - $201
   Team 7: + $3
   Dave: + $198
   

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4. View Slide

5. On-line Ad Auction Integrity
   How can we trust the auctioneer (Google, Facebook)?
   Verifiable Auctions
   Click Fraud
   4
   

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6. Second Weighted-Price Auction
   Bidder Score Score-Weighted Bid Price
   !"
   #"
   !"
   #"
   !$
   #$
   /#"
   !$
   #$
   !$
   #$
   !&
   #&
   /#$
   !&
   #&
   !&
   #&
   !'
   #'
   /#&
   … … … …
   5
   If auctioneer is unethical, short-term revenue maximizing, what should auctioneer charge winner?
   

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7. Verifiable Generalized Second-Price Auction
   Bidder Price
   !"
   !#
   !#
   !$
   !$
   !%
   … …
   6
   Goal: Prove to winner bidder that !#
   is the correct price.
   Keep all bids other than the winners private.
   

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8. Verifiable Auction
   7
   Image from: Sebastian Angel and Michael Walfish, Verifiable
   Auctions for Online Ad Exchanges, SIGCOMM 2013.
   Seller:
   Winning Bidder:
   Auction outcome: ("#$$#$% ''(), +)#,()
   

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9. Cryptographic Hash Function
   A cryptographic hash function, !(#), must satisfy these two properties:
   one-way (preimage resistance):
   given ℎ = !(#) it is hard to find preimage #.
   strong collision-resistance:
   hard to find any pair # and ' where !(#) = !(').
   8
   

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10. Cryptographic Hash Function
    A cryptographic hash function, !(#), must satisfy these two properties:
    one-way (preimage resistance):
    given ℎ = !(#) it is hard to find preimage #.
    strong collision-resistance:
    hard to find any pair # and ' where !(#) = !(').
    9
    Ideal: “Random Oracle”
    Instantiation: SHA-256
    

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11. Implementing a Hash Function
    10
    IV
    K
    Å
    !1
    #$
    Å
    !
    2
    #
    2
    ... K
    Å
    !&
    '(!) = #+
    Cipher Block Chaining
    Encrypt Encrypt
    Encrypt
    

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12. SHA-2
    11
    http://opencores.org/project,sha256core
    SHA-256
    256-bit output
    64 rounds
    (best known
    attacks break
    preimage
    resistance for
    52 rounds)
    

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13. Hash Chain
    12
    Hash
    ! Hash Hash Hash "#
    = %#(!)
    "(
    ")
    "*
    …
    Assuming inverting is hard, what can you prove using "#
    ?
    

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14. Charge
    13
    “The best minds of my
    generation are thinking
    about how to make people
    click ads. That sucks.”
    Jeff Hammerbacher
    (Facebook → Cloudera → Mount Sinai Medicine)
    

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