In markets where game theory and mechanism design are used for resource allocation or cost sharing, agents are independent and rational, i.e., each agent aims to get higher individual utility for itself. Collusion takes place when a subset of agents deviates from the strategy of truthfully reporting their private information to manipulate the game outcomes.
Collusion is a pervasive problem in markets. Agents have the incentive to collude and cheat, when collusion is profitable, e.g., they can gain more group utility as well as individual utilities.
Many case studies in practice show that traditional auctions are vulnerable to collusive behaviors. For example, in previous FCC spectrum auctions (Cramton and Schwartz, 2000), where the bids for spectrum licenses were large in hundreds of millions and there were no constraints on the submitted bids, bidders signaled with...
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