The Clock Proxy Auction for Allocating Radio Spectrum Licenses

Abstract

The combinatorial clock-proxy auction is analyzed as a selling mechanism of a portion of the "digital dividend" in an European country. We assumed bidders with bounded rationality making their bidding decisions based on a system of recommendation that learns from the environment. The auction outcome when all bidders follow the proposed strategies was compared with the efficient outcome of the auction. Although significant differences were found in the seller's income, no significant variations were found in the distribution of spectrum licenses among bidders.

Exploring pricing rules in combinatorial sealed-bid auctions

“…Similarly, Cliff (2003) extended his line of research on evolving trading strategies and auction rules to evaluate aggregate market performance, and Saez et al (2007) used independent parallel GAs to study the outcome of Ausubel auctions with different rationing rules. Finally, the use of GAs for analyzing the clock-proxy auction is covered in Mochon et al (2011).…”

“…Thus, one individual/chromosome represents 10 different possible strategies: P j,n = C 1 j,n = [g 1 j,n , g 2 j,n , .., g 10 j,n ], where g x j,n ∈ {1, 2, 3, 4, 5, 6, 7, 8, 9, 10}. This process of chromosome encoding is similar to the one used in Mochon et al (2009Mochon et al ( , 2011. Basically, these values tell the buyer how to bid, meaning the percentage of his/her value that he/she should report.…”

Understanding Auctions

“…10 The proxy phase with mandatory proxy bidding (bidders not allowed to change their reported preferences) is observationally equivalent to a sealed-bid auction, see [8]. 11 Mochon et al [55] analyzed the possible outcomes obtained when using this auction model to allocate radio spectrum licenses by means of genetic algorithms. 12 Different governments have used this auction mechanism to award spectrum licenses: Switzerland (2012), United Kingdom (2012), or Canada (2013).…”