Designing Mechanisms for E-Commerce Security: An Example from Sealed-Bid Auctions

Abstract

The use of computing technology is a necessary but not sufficient approach to enhancing e-commerce security. It should be supplemented by the application of economic mechanisms to design e-processes that discourage the exploitation of security weaknesses. Mechanisms that function well in traditional commerce should be updated to accommodate new problems raised in e-commerce, such as the lack of authentication. As an illustration, thiezezs research focuses on on-line auction mechanisms and develops a Leveled Partition Set (LPS) protocol for multi-unit sealed-bid auctions. LPS prevents on-line false-name bidding whereby bidders increase their utility by splitting their bids for a large bundle to several smaller bundles under false identities.