Combinatorial clock auctions: Price direction and performance

Abstract

The lack of price guidance towards efficiency relevant packages in ascending combinatorial clock auctions (ACCA) can lead to a low-efficiency allocation of goods. We propose a descending price combinatorial clock auction (DCCA) with a newly devised pricing strategy to improve on this problem. Using agent-based simulations we document that the DCCA provides significant improvements over the ACCA and we are able to understand in which environments these improvements are likely to be the strongest. We test these predictions in the laboratory with human subjects and find evidence that the DCCA generates improvements in auction efficiency and revenue.