Simultaneous Ascending Auction

The simultaneous ascending auction has proved to be a successful method of auctioning many related items. Simultaneous sale and ascending bids enable price discovery, which helps bidders build desirable packages of items. Although package bids are not allowed, the auction format does handle mild complementarities well. I examine the auction design and its performance in practice.Auctions, Ascending Auctions, Market Design

On some collusive and signaling equilibria in ascending auctions for multiple objects

We consider two ascending auctions for multiple objects: the SEAMO (simultaneous English auction for multiple objects) and the the JAMO (Japanese auction for multiple objects). We first derive a (competitive) Perfect Bayesian Equilibrium of the JAMO by exploiting the strategic equivalence between the JAMO and the Survival Auction which consists of a finite sequence of sealed-bid auctions. Then, we prove that many of the (unwanted) collusive or signaling equilibria studied in the literature in the framework of the SEAMO do not have a counterpart in the JAMO. However, it is shown that certain collusive equilibria based on retaliatory strategies do exist in both auctions.Multi-unit auctions; Ascending auctions; FCC auctions; Collusion; Retaliation

Spectrum Auctions

Auctions have emerged as the primary means of assigning spectrum licenses to companies wishing to provide wireless communication services. Since July 1994, the Federal Communications Commission (FCC) has conducted 33 spectrum auctions, assigning thousands of licenses to hundreds of firms. Countries throughout the world are conducting similar auctions. I review the current state of spectrum auctions. Both the design and performance of these auctions are addressed.Auctions, Spectrum Auctions, Multiple Item Auctions

Optimal Design Of English Auctions With Discrete Bid Levels

This paper considers a form of ascending price English auction widely used in both live and online auctions. This discrete bid auction requires that the bidders submit bids at predetermined discrete bid levels, and thus, there exists a minimal increment by which the bid price may be raised. In contrast, the academic literature of optimal auction design deals almost solely with continuous bid auctions. As a result, there is little practical guidance as to how an auctioneer, seeking to maximize its revenue, should determine the number and value of these discrete bid levels, and it is this omission that is addressed here. To this end, a model of a discrete bid auction from the literature is considered, and an expression for the expected revenue of this auction is derived. This expression is used to determine both numerical and analytical solutions for the optimal bid levels, and uniform and exponential bidder’s valuation distributions are compared. Finally, the limiting case where the number of discrete bid levels is large is considered. An analytical expression for the distribution of the optimal discrete bid levels is derived, and an intuitive understanding of how this distribution maximizes the revenue of the auction is developed

The Simultaneous, Ascending Auction: Dynamics of Price Adjustment in Experiments and in the U.K. 3G Spectrum Auction

In this paper we develop a model of the behavior of bidders in simultaneous ascending auctions based on two principles: principle of surplus maximization and the principle of bid minimization. These principles lead to models of both price dynamics and equilibration, leading to disequilibrium structural equations that can be used for estimating bidder values. The intention behind the development of this methodology is to provide an auctioneer a method of extracting information during an auction about possible closing prices. We first benchmark the performance of the model with data from experimental auctions and then apply it to the U.K. UMTS or Third Generation Mobile auction

Econometrics for Learning Agents

The main goal of this paper is to develop a theory of inference of player valuations from observed data in the generalized second price auction without relying on the Nash equilibrium assumption. Existing work in Economics on inferring agent values from data relies on the assumption that all participant strategies are best responses of the observed play of other players, i.e. they constitute a Nash equilibrium. In this paper, we show how to perform inference relying on a weaker assumption instead: assuming that players are using some form of no-regret learning. Learning outcomes emerged in recent years as an attractive alternative to Nash equilibrium in analyzing game outcomes, modeling players who haven't reached a stable equilibrium, but rather use algorithmic learning, aiming to learn the best way to play from previous observations. In this paper we show how to infer values of players who use algorithmic learning strategies. Such inference is an important first step before we move to testing any learning theoretic behavioral model on auction data. We apply our techniques to a dataset from Microsoft's sponsored search ad auction system

Does it Pay Off to Bid Aggressively? An Empirical Study

In this research, we empirically investigate the payoff of aggressive bidding in an online auction. To address our research question, we use a unique and very rich dataset containing actual market transaction data for approximately 7,000 pay-per-bid auctions. Our research design allows us to isolate the impact of bidding aggressively in an attempt to signal a high valuation on the probability to win an auction. In particular, we analyze more than 600,000 bids placed manually by approximately 2,600 distinct auction participants. The strong and significantly negative effect of aggressive bidding on the likelihood of winning an auction revealed by our analysis suggests that an aggressive bidding strategy is not beneficial in increasing the chances of winning an online auction

Auctioning Conservation Contracts: An Application to the Flemish Afforestation Policy

This paper studies the possibility of using auctions as a policy instrument in conservation programs. In particular, it provides insight into the main concerns that need to be dealt with when implementing conservation auctions. To show the cost saving potential of this policy instrument, we also calculate the social welfare improvement that can be obtained for an afforestation project in Flanders. Creation-Date: 2006-03Auctions; Conservation contracts; Afforestation

Cyber-Shilling in Automobile Auctions: Evidence from a Field Experiment

We run a large field experiment with an online company specializing in selling used automobiles via ascending auctions. We manipulate experimentally the "price grid," or the possible amounts that bidders can bid above the current standing price. Using two diverse auction sites, one in New York and one in Texas, we find that buyer and seller behavior differs strikingly across the two sites. Specifically, in Texas we find peculiar patterns of bidding among a small but prominent group of buyers suggesting that they are "cyber-shills" working on behalf of sellers. These patterns do not appear in the New York auctions