Privacy-Preserving Market Design

Preserving privacy is, increasingly, a concern in auctions and exchanges. To examine the role of privacy in markets, this paper suggests an alternative to “dierential privacy” (Dwork (2006)) that accommodates settings in which outcomes of a mechanism respond to incentives. We formulate a class of mechanism design problems based on the uniformprice market clearing to study the joint design of (i) bids schedules (contingent variables); (ii) transparency settings for auction outcomes (observables); and (iii) the timing of market clearing. A design preserves privacy if the publicly observable outcome is not sucient to recover the participants’ private information. We show that this privacy requirement can be necessary for the viability of the market ‐ if violated, equilibrium may not exist. There need not be a trade-o between privacy preservation and welfare, in general. In particular, privacy-preserving design can be ecient. Common market