Class 16: Auctions with Integrity

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/

40e37c08199ed4d3866ce6e1ff0be06d?s=128

David Evans

March 07, 2019
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  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
  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
  3. 2 Auction Result: Team 3: - $201 Team 7: +

    $3 Dave: + $198
  4. 3

  5. On-line Ad Auction Integrity How can we trust the auctioneer

    (Google, Facebook)? Verifiable Auctions Click Fraud 4
  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?
  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.
  8. Verifiable Auction 7 Image from: Sebastian Angel and Michael Walfish,

    Verifiable Auctions for Online Ad Exchanges, SIGCOMM 2013. Seller: Winning Bidder: Auction outcome: ("#$$#$% &#''(), +)#,()
  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
  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
  11. Implementing a Hash Function 10 IV K Å !1 #$

    Å ! 2 # 2 ... K Å !& '(!) = #+ Cipher Block Chaining Encrypt Encrypt Encrypt
  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)
  13. Hash Chain 12 Hash ! Hash Hash Hash "# =

    %#(!) "( ") "* … Assuming inverting is hard, what can you prove using "# ?
  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)