2026/07/18 by Tejovan Parker, Gabriel McDonnell Maayan, Francisco Marmolejo-Cossío +1
Computer Science · #cs.GT
Although standard auction mechanisms help truthfully reveal preferences of bidders, they can inadvertently result in unbounded harms when they fail to account for externalities caused by bid allocations affecting non-bidders. Ad markets, that buy and sell user attention represent such auctions. This research explores a welfare improving auctioneer's audit-and-penalty mechanism that helps screen the worst externalities. We prove this mechanism can internalize externalities formally, then explore social welfare gains empirically.