Strategy-Proof Data Auctions with Negative Externalities

Data has appeared to be a new kind of commodity with distinctive characteristics, which make it fundamentally different from physical goods as well as traditional digital goods. Therefore, new trading mechanisms for data need to be designed. In this paper, we model the data market as an auction with negative externalities, and design practical mechanisms for data trading. Specifically, we propose a family of Data auctIons in CompetiTive mArkets, namely DICTA. DICTA contains two mechanisms, including DICTAFUL and DICTA-PAR. DICTA-FUL is a direct revelation auction mechanism in full competition markets, achieving strategy-proofness and optimal social welfare. In the partial competition markets, we show that the allocation problem is NP-hard. Therefore, we present an approximation algorithm for winner determination. By carefully integrating this approximation allocation algorithm and a charging scheme, DICTA-PAR achieves both strategy-proofness and d-approximation, where d is the maximum degree of the underlying undirected graph of the competition graph.