International Association
for Cryptologic Research

We present novel security requirements for second price auctions and a

simple, efficient and practical protocol that provably maintains these

requirements. Novel requirements are needed because commonly used requirements,

such as the indistinguishability-based secrecy requirement of encryption schemes

presented by \\cite{goldwasser1982pep}, do not fit properly in the second price

auctions context. Additionally, the presented protocol uses a trustworthy

supervisor that checks if the auctioneer deviated from the protocol and fines

him accordingly. By making sure the expected utility of the auctioneer when

deviating from the protocol is lower than his expected utility when abiding by

the protocol we ascertain that a {\\em rational} auctioneer will abide by the

protocol. This allows the supervisor to optimize by performing

(computationally-intensive) inspections of the auctioneer with only low

probability.