A Redistribution Framework for Diffusion Auctions

Abstract: Redistribution mechanism design aims to redistribute the revenue collected by a truthful auction back to its participants without affecting the truthfulness. We study redistribution mechanisms for diffusion auctions, which is a new trend in mechanism design [19]. The key property of a diffusion auction is that the existing participants are incentivized to invite new participants to join the auctions. Hence, when we design redistributions, we also need to maintain this incentive. Existing redistribution mechanisms in the traditional setting are targeted at modifying the payment design of a truthful mechanism, such as the Vickrey auction. In this paper, we do not focus on one specific mechanism. Instead, we propose a general framework to redistribute the revenue back for all truthful diffusion auctions for selling a single item. The framework treats the original truthful diffusion auction as a black box, and it does not affect its truthfulness. The framework can also distribute back almost all the revenue.