Competitive generalized auctions

We describe mechanisms for auctions that are simultaneously truthful (alternately known as strategy-proof or incentive-compatible) and guarantee high "net" profit. We make use of appropriate variants of competitive analysis of algorithms in designing and analyzing our mechanisms. Thus, We do not require any probabilistic assumptions on bids. We present two new concepts regarding auctions, that of a cancellable auction and that of a generalized auction. We use cancellable auctions in the design of generalized auctions, but they are of independent interest as well. Cancellable auctions have the property that if the revenue collected does not meet certain predetermined criteria, then the auction can be cancelled and the resulting auction is still truthful. The trivial approach (run a truthful auction and cancel if needed) yields an auction that is not necessarily truthful. Generalized auctions can be used to model many problems previously considered in the literature, as well as numerous new problems. In particular, we give the first truthful profit-maximizing auctions for problems such as conditional financing and multicast.