Balancing Efficiency with Equality: Auction Design with Group Fairness Concerns

Abstract: The issue of fairness in AI arises from discriminatory practices in applications like job recommendations and risk assessments, emphasising the need for algorithms that do not discriminate based on group characteristics. This concern is also pertinent to auctions, commonly used for resource allocation, which necessitate fairness considerations. Our study examines auctions with groups distinguished by specific attributes, seeking to (1) define a fairness notion that ensures equitable treatment for all, (2) identify mechanisms that adhere to this fairness while preserving incentive compatibility, and (3) explore the balance between fairness and seller's revenue. We introduce two fairness notions-group fairness and individual fairness-and propose two corresponding auction mechanisms: the Group Probability Mechanism, which meets group fairness and incentive criteria, and the Group Score Mechanism, which also encompasses individual fairness. Through experiments, we validate these mechanisms' effectiveness in promoting fairness and examine their implications for seller revenue.