Diffusion Multi-unit Auctions with Diminishing Marginal Utility Buyers

Abstract: We consider an auction design problem where a seller sells multiple homogeneous items to a set of connected buyers. Each buyer only knows the buyers she directly connects with and has a diminishing marginal utility valuation for the items. The seller initially only connects to some buyers who can be directly invited to the sale by the seller. Our goal is to design an auction to incentivize the buyers who are aware of the auction to further invite their neighbors to join the auction. This is challenging because the buyers are competing for the items and they would not invite each other by default. Thus, rewards need to be given to buyers who diffuse information, but the rewards should be carefully designed to guarantee both invitation incentives and the seller's revenue. Solutions have been proposed recently for the settings where each buyer requires at most one unit and demonstrated the difficulties of the design. We move this forward to propose the very first diffusion auction for the multi-unit demand settings to improve both the social welfare and the seller's revenue.