Core-selecting combinatorial auction design for secondary spectrum markets

In a secondary spectrum market, the utility of a secondary user often depends on not only whether it wins, but also which channels it wins. Combinatorial auctions are a natural fit here to allow secondary users to bid for combinations of channels. In this context, the VCG mechanism constitutes a generic auction that uniquely guarantees both truthfulness and efficiency, but it is vulnerable to shill bidding and generates low revenue. In this paper, without compromising efficiency, we propose to design core-selecting auctions instead, which resolves VCG´s vulnerability and improves seller revenue. We prove that in a secondary spectrum market, the revenue gleaned from a core-selecting auction is at least that of the VCG mechanism, and shills are not profitable to bidders. Employing linear programming and quadratic programming techniques, we design two payment rules suitable for our core-selecting auction, which aim to minimize the incentives of bidders to deviate from truthful-telling. Our extensive simulation results show that the revenues can be largely increased due to spectrum sharing.