Secure Vickrey Auctions with Rational Parties

In this work, we construct a second price (Vickrey) auction protocol (SPA), which does not require any auctioneers and ensures total privacy in the presence of rational parties participating in the auction. In particular, the confidentiality of the highest bid and the identity of the second highest bidder are protected. We model the bidders participating in the second price auction as rational, computationally bounded and privacy-sensitive parties. These are self-interested agents who care about winning the auction more than learning about the private bids of other parties. A rational party does not deviate from the protocol arbitrarily but does so only for its own individual 'advantage' -- without any consideration for others. Such an advantage is modelled using suitable utility functions.