Collusion in VCG Path Procurement Auctions

We consider collusion in path procurement auctions, where payments are determined using the VCG mechanism. We show that collusion can increase the utility of the agents, and in some cases they can extract any amount the procurer is willing to offer. We show that computing how much a coalition can gain by colluding is NP-complete in general, but that in certain interesting restricted cases, the optimal collusion scheme can be computed in polynomial time. We examine the ways in which the colluders might share their payments, using the core and Shapley value from cooperative game theory. We show that in some cases the collusion game has an empty core, so although beneficial manipulations exist, the colluders would find it hard to form a stable coalition due to inability to decide how to split the rewards. On the other hand, we show that in several common restricted cases the collusion game is convex, so it has a non-empty core, which contains the Shapley value. We also show that in these ...

• Type: Journal
• Year: 2010
• Where: WINE
• Authors: Yoram Bachrach, Peter Key, Morteza Zadimoghaddam
• Keywords: Collusion, Collusion Game, Economy, Shapley Value, WINE 2010