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Auctions have been proposed as a way to provide economic incentives forprimary users to dynamically allocate unused spectrum to other users in need ofit. Previously proposed schemes do not take into account the fact that thepower constraints of users might prevent them from transmitting their bidprices to the auctioneer with high precision and that transmitted bid pricesmust travel through a noisy channel. These schemes also have very highoverheads which cannot be accommodated in wireless standards. We proposeauction schemes where a central clearing authority auctions spectrum to userswho bid for it, while taking into account quantization of prices, overheads inbid revelation, and noise in the channel explicitly. Our schemes are closelyrelated to channel output feedback problems and, specifically, to the techniqueof posterior matching. We consider several scenarios where the objective of theclearing authority is to award spectrum to the bidders who value spectrum themost. We prove theoretically that this objective is asymptotically attained byour scheme when the bidders are non-strategic with constant bids. We proposeseparate schemes to make strategic users reveal their private valuestruthfully, to auction multiple sub-channels among strategic users, and totrack slowly time-varying bid prices. Our simulations illustrate the optimalityof our schemes for constant bid prices, and also demonstrate the effectivenessof our tracking algorithm for slowly time-varying bids.

Secondary Spectrum Auctions for Markets with Communication Constraints