Mechanism Design with Information Leakage

2025/11/01 by Häfner, Samuel, Pycia, Marek, Zeng, Haoyuan · 1 citation
#FOS: Economics and business #Theoretical Economics (econ.TH)

paper · doi:10.48550/arxiv.2511.00715

Abstract

We study the design of mechanisms -- e.g., auctions -- when the designer does not control information flows between mechanism participants. A mechanism equilibrium is leakage-proof if no player conditions their actions on leaked information; a property distinct from ex-post incentive compatibility. Only leakage-proof mechanisms can implement social choice functions in environments with leakage. Efficient auctions need to be leakage-proof, while revenue-maximizing ones not necessarily so. Second-price and ascending auctions are leakage-proof; first-price auctions are not; while whether descending auctions are leakage-proof depends on tie-breaking.

Citations

• Shill-Proof Auctions
• Strategically Simple Mechanisms
• Optimal Auction Design

Cited by

• Private From Whom? Minimal Information Leakage in Auctions

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• Private From Whom? Minimal Information Leakage in Auctions
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