Designing Coalition-Proof Reverse Auctions Over Continuous Goods

Abstract

This paper investigates reverse auctions that involve continuous values of different types of goods, general nonconvex constraints, and second stage costs. We seek to design the payment rules and conditions under which coalitions of participants cannot influence the auction outcome in order to obtain higher collective utility. Under the incentive compatible Vickrey–Clarke–Groves mechanism, we show that coalition-proof outcomes are achieved if the submitted bids are convex and the constraint sets are of a polymatroid-type. These conditions, however, do not capture the complexity of the general class of reverse auctions under consideration. By relaxing the property of incentive compatibility, we investigate further payment rules that are coalition-proof without any extra conditions on the submitted bids and the constraint sets. Our results are verified with several case studies based on electricity market\xa0data.