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Do core-selecting Combinatorial Clock Auctions always lead to high efficiency? An experimental analysis of spectrum auction designs

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  • Martin Bichler
  • Pasha Shabalin
  • Jürgen Wolf

Abstract

For many years the Simultaneous Multi-Round Auction (SMRA) has been the primary auction design for spectrum sales worldwide. Recently, the core-selecting Combinatorial Clock Auction (CCA) has been used as an alternative to the SMRA in a number of countries promising strong incentives for truthful bidding and high efficiency as a result. We analyze the efficiency and auctioneer revenue of the CCA in comparison to SMRA and examine bidding behavior in both formats. The experiments are based on two value models, which resemble single- and multiband spectrum sales in the field. Such applications often allow for thousands of possible bundles. Bidders in the CCA submitted bids for only a fraction of all bundles with a positive valuation. Bundles were selected based on synergies and payoff after the primary bid rounds. As a consequence, we found efficiency of the CCA to be significantly lower than that of SMRA in the multi-band value model and auctioneer revenue of the CCA to be lower in both value models. In addition, we characterize several properties of the auction format, which result from the two-stage design and the payment and activity rules. Copyright Economic Science Association 2013

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  • Martin Bichler & Pasha Shabalin & Jürgen Wolf, 2013. "Do core-selecting Combinatorial Clock Auctions always lead to high efficiency? An experimental analysis of spectrum auction designs," Experimental Economics, Springer;Economic Science Association, vol. 16(4), pages 511-545, December.
    • Handle: RePEc:kap:expeco:v:16:y:2013:i:4:p:511-545
    DOI: 10.1007/s10683-013-9350-3
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    Cited by:

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    2. Kazumori, Eiichiro & Belch, Yaakov, 2019. "t-Tree: The Tokyo toolbox for large-scale combinatorial auction experiments," Journal of Behavioral and Experimental Finance, Elsevier, vol. 24(C).
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    4. Scott Duke Kominers & Alexander Teytelboym & Vincent P Crawford, 2017. "An invitation to market design," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 33(4), pages 541-571.
    5. Simon Loertscher & Leslie M. Marx & Tom Wilkening, 2015. "A Long Way Coming: Designing Centralized Markets with Privately Informed Buyers and Sellers," Journal of Economic Literature, American Economic Association, vol. 53(4), pages 857-897, December.
    6. Janssen, Maarten & Kasberger, Bernhard, 2019. "On the clock of the combinatorial clock auction," Theoretical Economics, Econometric Society, vol. 14(4), November.
    7. Lamprirni Zarpala & Dimitris Voliotis, 2022. "A core-selecting auction for portfolio's packages," Papers 2206.11516, arXiv.org, revised Feb 2024.
    8. Kagel, John H. & Lien, Yuanchuan & Milgrom, Paul, 2014. "Ascending prices and package bidding: Further experimental analysis," Games and Economic Behavior, Elsevier, vol. 85(C), pages 210-231.
    9. Goetzendorff, Andor & Bichler, Martin & Goeree, Jacob K., 2018. "Synergistic valuations and efficiency in spectrum auctions," Telecommunications Policy, Elsevier, vol. 42(1), pages 91-105.
    10. Henriques, David, 2023. "A combinatorial auction to sell TV broadcasting rights in league sports," Telecommunications Policy, Elsevier, vol. 47(6).
    11. Vogelsang Ingo, 2013. "The Endgame of Telecommunications Policy? A Survey," Review of Economics, De Gruyter, vol. 64(3), pages 193-270, December.
    12. Mochon, Asuncion & Saez, Yago, 2017. "A review of radio spectrum combinatorial clock auctions," Telecommunications Policy, Elsevier, vol. 41(5), pages 303-324.
    13. Heczko, Alexander & Kittsteiner, Thomas & Ott, Marion, 2018. "The Performance of Core-Selecting Auctions: An Experiment," EconStor Preprints 176842, ZBW - Leibniz Information Centre for Economics.
    14. Kaplan, Todd R. & Zamir, Shmuel, 2015. "Advances in Auctions," Handbook of Game Theory with Economic Applications,, Elsevier.
    15. Kemal Guler & Martin Bichler & Ioannis Petrakis, 2016. "Ascending Combinatorial Auctions with Risk Averse Bidders," Group Decision and Negotiation, Springer, vol. 25(3), pages 609-639, May.
    16. Martin Bichler & Zhen Hao & Gediminas Adomavicius, 2017. "Coalition-Based Pricing in Ascending Combinatorial Auctions," Information Systems Research, INFORMS, vol. 28(1), pages 159-179, March.
    17. Janssen, Maarten & Karamychev, Vladimir, 2016. "Spiteful bidding and gaming in combinatorial clock auctions," Games and Economic Behavior, Elsevier, vol. 100(C), pages 186-207.
    18. Bichler, Martin & Goeree, Jacob K., 2017. "Frontiers in spectrum auction design," International Journal of Industrial Organization, Elsevier, vol. 50(C), pages 372-391.
    19. Jonathan Levin & Andrzej (Andy) Skrzypacz, 2014. "Are Dynamic Vickrey Auctions Practical?: Properties of the Combinatorial Clock Auction," Discussion Papers 14-002, Stanford Institute for Economic Policy Research.
    20. Committee, Nobel Prize, 2020. "Improvements to auction theory and inventions of new auction formats," Nobel Prize in Economics documents 2020-2, Nobel Prize Committee.
    21. Bichler, Martin & Goeree, Jacob & Mayer, Stefan & Shabalin, Pasha, 2014. "Spectrum auction design: Simple auctions for complex sales," Telecommunications Policy, Elsevier, vol. 38(7), pages 613-622.
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    23. Janssen, Maarten & Kasberger, Bernhard, 2019. "On the clock of the combinatorial clock auction," Theoretical Economics, Econometric Society, vol. 14(4).
    24. Bart Vangerven & Dries R. Goossens & Frits C. R. Spieksma, 2021. "Using Feedback to Mitigate Coordination and Threshold Problems in Iterative Combinatorial Auctions," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 63(2), pages 113-127, April.
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    More about this item

    Keywords

    Auctions; Lab experiments; Group behavior; Individual behavior; C91; C92; D44;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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