When Privacy Moves ML-Mediated Decisions On Device: Information and Incentive Misalignment in Auctions
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Abstract (arXiv)
Moving ML-mediated decision making onto privacy-preserving clients decentralises the economic decision along with the inference. Shared budget constraints then depend on information that cannot be globally current, creating an information-structure failure that conventional pacing is not designed to solve. We study this information misalignment in an auction-logic-faithful on-device simulation with 36 campaigns and 50 devices. Accounting is in dimensionless integer score units; no currency semantics are claimed. Across 30 paired demand paths, proportional Even pacing overspends 17.77% after one tick of staleness and 1,669.31% after 50 ticks under the original 20-times budget pressure. The effect does not depend on that severe a budget: at two-times pressure, 50-tick overspend remains 106.95%. A visible-budget no-sale guard makes zero-lag compliance exact at this score-unit granularity, yet leaves 11.88% overspend at one tick because other devices' debits remain invisible. A declared bursty, heterogeneous-device sweep retains a strictly increasing mean lag curve. We derive a finite-window expected excess-debit bound under conditional charge caps and find positive paired slack in every bounded-value cell. A second, incentive misalignment arises when the ML/pacing score transformation is allowed to change payment units: 98.23% of rival auctions at one tick admit a profitable deviation. An executable implementation-level counterexample isolates the runner-up's multiplier in the winner's price. Critical-base-bid payment is per-auction DSIC conditional on current multipliers, but does not establish dynamic truthfulness and does not repair base-value ranking disagreement.
Key facts. No citing papers in the map yet (data through 14 Oct 2026). Builds on 10 of its 21 references that are in the map. First posted on arXiv 27 Sep 2026.
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References · 10
- 2025gpt-oss-120b & gpt-oss-20b Model Cardcited by 1,386
- 2024WildChat: 1M ChatGPT Interaction Logs in the Wildcited by 629
- 2013Online Learning under Delayed Feedbackcited by 141
- 2020The Best of Many Worlds: Dual Mirror Descent for Online Allocation Problemscited by 58
- 2014Real-Time Bidding Benchmarking with iPinYou Datasetcited by 19
- 2022Budget Pacing in Repeated Auctions: Regret and Efficiency without Convergencecited by 18
- 2017Multiplicative Pacing Equilibria in Auction Marketscited by 16
- 2015Smart Pacing for Effective Online Ad Campaign Optimizationcited by 14
- 2013Real Time Bid Optimization with Smooth Budget Delivery in Online Advertisingcited by 13
- 2023A Field Guide for Pacing Budget and ROS Constraintscited by 7
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