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Are Dynamic Vickrey Auctions Practical?: Properties of the Combinatorial Clock Auction

Author

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  • Jonathan Levin

    (Stanford University)

  • Andrzej (Andy) Skrzypacz

    (Stanford University)

Abstract

The combinatorial clock auction is becoming increasingly popular for large-scale spectrum awards and other uses, replacing more traditional ascending or clock auctions. We describe some surprising properties of the auction, including a wide range of ex post equilibria with demand expansion, demand reduction and predation. These outcomes arise because of the way the auction separates allocation and pricing, so that bidders are asked to make decisions that cannot possibly affect their own auction outcome. Our results obtain in a standard homogenous good setting where bidders have well-behaved linear demand curves, and suggest some practical difficulties with dynamic implementations of the Vickrey auction.

Suggested Citation

  • 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.
    • Handle: RePEc:sip:dpaper:14-002
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    References listed on IDEAS

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    1. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521536721.
    2. 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.
    3. Jeremy Bulow & Jonathan Levin & Paul Milgrom, 2009. "Winning Play in Spectrum Auctions," NBER Working Papers 14765, National Bureau of Economic Research, Inc.
    4. Morgan John & Steiglitz Ken & Reis George, 2003. "The Spite Motive and Equilibrium Behavior in Auctions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 2(1), pages 1-27, April.
    5. Paul Klemperer, 2004. "Auctions: Theory and Practice," Online economics textbooks, SUNY-Oswego, Department of Economics, number auction1.
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    Cited by:

    1. Christian Kroemer & Martin Bichler & Andor Goetzendorff, 2016. "(Un)expected Bidder Behavior in Spectrum Auctions: About Inconsistent Bidding and Its Impact on Efficiency in the Combinatorial Clock Auction," Group Decision and Negotiation, Springer, vol. 25(1), pages 31-63, January.
    2. Janssen, Maarten & Karamychev, Vladimir, 2016. "Spiteful bidding and gaming in combinatorial clock auctions," Games and Economic Behavior, Elsevier, vol. 100(C), pages 186-207.
    3. Bichler, Martin & Goeree, Jacob K., 2017. "Frontiers in spectrum auction design," International Journal of Industrial Organization, Elsevier, vol. 50(C), pages 372-391.

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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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