Title: Activity Rules in Combinatorial Clock Auctions
Abstract: Combinatorial Clock Auction format has been widely adopted in most recent Bandwidth Auctions.
This format consists of two integrated phases: an ascending clock phase and a simultaneous bid round, the last allowing bidders to express supplementary bids on any package. The allocation is determined by considering all the bids placed in the two phases and the pricing rule is based on second price principles.
The intention of the clock phase is to assist bidders in price discovery and to avoid bids in the following simultaneous bid round. This goal can be achieved only if bidders are incentivized in bidding truthfully during this first stage: these incentives are given through activity rules that require different forms of consistency in the bidders’ behavior.
Unfortunately, no activity rule inducing the bidders’ desired behavior has already been found. A recent proposal by Ausubel and Baranov forces the bidders to ‘dynamically’ reveal an order of preference through bundles of items.
How can this progressive information be exploited by the seller? What is the induced bidders’ strategic behavior? Is the second price principle effectively promoting bidders’ truthful behavior?