Yuhang Guo: Characterization of Monotonic Allocation in Multi-unit Diffusion Auction

Abstract

Designing strategyproof mechanisms in multi-unit diffusion auctions has posed a significant challenge, as each agent’s allocation and price can be easily influenced by their invitees and siblings. In our study, we contend that allocation monotonicity, regarding both valuation and diffusion, plays a pivotal role in the design of strategyproof diffusion auctions. Building on existing research in this field, we investigate monotonic allocation rules and their corresponding optimal payments within the context of two distinct types of belief preferences. Subsequently, we consolidate our findings into a general framework that facilitates the design of strategyproof diffusion auction mechanisms. Considering that optimal payment rules establish the upper bound of revenue under any deterministic monotonic allocation, this paradigm reveals the significance of prioritizing the search for a more efficient monotonic allocation, under a non-deficit restriction, rather than solely focusing on strategyproofness.