Strategic Complexities in the Combinatorial Clock Auction

20 Pages Posted: 7 Nov 2012

See all articles by Vitali Gretschko

Vitali Gretschko

ZEW – Leibniz Centre for European Economic Research

Stephan Knapek

TWS Partners

Achim Wambach

ZEW – Leibniz Centre for European Economic Research; University of Mannheim; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Date Written: July 2016

Abstract

In recent years, regulatory bodies in Europe and around the world implemented Combinatorial Clock Auctions (CCA) to allocate scarce and valuable spectrum frequencies usage rights. Although the auction design is complex, the promise is that bidding becomes simple. More precisely, bidders may bid on the profit-maximizing package (truthful bidding) during the clock phase and submit bids that are equal to their valuations on only a handful of relevant packages (truncated bidding) in the supplementary phase. While this might be correct with the ideal implementation of the CCA for perfectly rational, profit-maximizing bidders with private values, our experience with consulting bidders shows that practical implementations of the CCA and the concerns of the bidders lead to severe complexities in determining the right bidding behavior. We provide simple examples that illustrate how “truthful and truncated“ bidding may be harmful to bidders and thereby illustrate the complexities bidders face in preparing for a CCA.

Keywords: combinatorial clock auction

JEL Classification: D440, L960

Suggested Citation

Gretschko, Vitali and Knapek, Stephan and Wambach, Achim, Strategic Complexities in the Combinatorial Clock Auction (July 2016). CESifo Working Paper Series No. 3983, Available at SSRN: https://ssrn.com/abstract=2171680

Vitali Gretschko

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Stephan Knapek

TWS Partners ( email )

Widenmayerstr. 38
Munich
Germany

Achim Wambach (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

University of Mannheim ( email )

Universitaetsbibliothek Mannheim
Zeitschriftenabteilung
Mannheim, 68131
Germany

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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