Distributed Mechanism Design in Social Networks

Abstract: Designing auctions to incentivize buyers to invite new buyers via their social connections is a new trend in mechanism design. The challenge is that buyers are competitors and we need to design proper incentives for them to invite each other. For selling a single item, many interesting mechanisms have been proposed. However, all the mechanisms require the seller or a third party to be trustworthy to execute the mechanisms. In addition, the owner of the mechanism will know all the connections of the network after the execution, which poses a potential privacy issue. Hence, distributed mechanisms to avoid the privacy issue are more appealing in practice. Therefore, in this paper, we propose the first distributed mechanism in social networks without revealing buyers' private connections to anyone, and it achieves complete decentralization that does not rely on any trustworthy third party. Moreover, the centralized reduction of our mechanism also offers a novel way to compute players' contributions compared to the existing solutions.