Optimal Spectrum Auction Design with Two-Dimensional Truthful Revelations under Uncertain Spectrum Availability

Abstract: In this paper, we propose a novel sealed-bid auction framework to address the problem of dynamic spectrum allocation in cognitive radio (CR) networks. We design an optimal auction mechanism that maximizes the moderator's expected utility, when the spectrum is not available with certainty. We assume that the moderator employs collaborative spectrum sensing in order to make a reliable inference about spectrum availability. Due to the presence of a collision cost whenever the moderator makes an erroneous inference, and a sensing cost at each CR, we investigate feasibility conditions that guarantee a non-negative utility at the moderator. We present tight theoretical-bounds on instantaneous network throughput and also show that our algorithm provides maximum throughput if the CRs have i.i.d. valuations. Since the moderator fuses CRs' sensing decisions to obtain a global inference regarding spectrum availability, we propose a novel strategy-proof fusion rule that encourages the CRs to simultaneously reveal truthful sensing decisions, along with truthful valuations to the moderator. Numerical examples are also presented to provide insights into the performance of the proposed auction under different scenarios.