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A Combinatorial Auction Designed for the Federal Communications Commission Charles R. Plott California Institute of Technology BINARY CONFLICT MECHANSMS (BICAP) Winning packages cannot intersect.

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Presentation Transcript
slide1

A Combinatorial Auction Designed for the Federal Communications Commission

Charles R. Plott

California Institute of Technology

slide2

BINARY CONFLICT MECHANSMS (BICAP)

Winning packages cannot intersect.

Binary conflict is a very general concept. Non intersecting paths and routes can be viewed as applications.

slide3

TIME PATH OF AUCTION PROCESS

SEALED BID THEN CONTINUOUS

slide4

Eligibility Forces Bidding: Rules and Management

Eligibility t =

min [  Activity t-1, Eligibility t-1]

max Activity in sealed bid phase

Activity in continuous phase

S

EXPOSURE

³

Eligibility

bidding units on item j

LIMITS CONSTRAINT

all items j

bid as

singleton

S

S

POSITIONING

³

Eligibility

bidding units on item j

INCENTIVES

CONSTRAINT

Î

all bids

j

K

K with

two or

more

items

slide5

SPEED PARAMETERS

INCREMENT REQUIREMENTS - A BID WHEN PLACED MUST BE X%

ABOVE THE MAXIMUM COVER

b

ACTIVITY =

WINNING BIDS BIDDING POINTS

AGGRESSIVE BIDS

1

+

COUNT FOR MORE

b

WINNING LEVEL BIDS

ACTIVITY

2

+

b

AT OR ABOVE MAXIMUM COVER

3

+

b

BELOW MAXIMUM COVER

4

The cover of a set K is the maximum of bids in the systems with union contained in K. A bid is dominated if it is less than the value of the cover. For simplicity, a cover limited to unions of singles has been suggested for 3 and 4.

slide6

MEASUREMENTS HERE

ROUND t END

ROUND t+1 END

ABC 100

WINNERS

ABCD 100

D 15

In ROUND t+2 these two bids will get no activity credit because they are both below their respective covers. The covers for activity are relative to bids in the system when the round opens (in this case bids at the end of one round and bids at the beginning of the next round are the same).

BC 20

ABOVE MIN WIN

ABCD 100

AD 85

A 40

B 5

BCD 50

ABOVE VALUE OF SINGLES/COVER

C 10

BC 20

D 15

A40

B 10

C10

BELOW

B 5

slide8

Query Results

All bids in system.

Provisional winners (yellow)

slide10

Bids kicked out as provisional winners.

Bids brought in as provisional winners.

slide11

DOES IT WORK?

Proof of Concept: Efficiency

Design Consistency: ?

slide13

A

B

C

D

E

F

G

H

I

J

K

L

A

B

C

D

E

F

G

H

I

J

K

L

The colors represent bidders and not whether a package is involved.

first best 100% efficiency

Actual outcome at 98% efficiency. The inefficiency is due to misallocations of the second six items, which are of low value. Only I and K are in the wrong hands.

slide16

Efficient allocation and actual allocation in the 34 license experiment. Color of box is bidder who should get the license. The dot is the color of the bidder who got the license. No dot on a license means the right bidder got it. Notice that the pattern is complex. All bidders have a preference for all licenses. Efficiency forces compromises as shown.