Future Auctions Research Articles

Hierarchical modeling and prediction of spectrum auction revenue by a posteriori clusters

The electromagnetic spectrum is a crucial asset for wireless technology innovation and for the industry's economy. We examine spectrum auction-related databases, construct a hierarchical data matrix, and propose an optimal auction revenue model. The model incorporates statistically derived deterministic and stochastic variables to develop a spectrum valuation methodology for its primary market. Our study reveals that the underlying regulations, bidding behavior, and spectrum demands due to wireless technology advancement are effectively elucidated by the selected explanatory variables and are highly correlated with auction revenues. This paper is the first to introduce a hierarchical modeling technique that incorporates a multilevel data matrix culminated from 3995 licenses of 15 Federal Communications Commission spectrum auctions to enable economic valuation for future spectrum auctions. Furthermore, the results of this study can be applied to evaluate the significance of sunk costs, winner's curses, and associated cost synergies, which are economic implications of spectrum auctions. Our research contributions are twofold. First, the hierarchical auction model can maximize spectrum valuation methodologies, thereby assisting spectrum regulators and the wireless industry. Second, we compare the reproducibility of hierarchical and ordinary least squares modeling techniques to support adequate validation and their extensive utilization in academic disciplines.

Bidding behaviors in charity auctions

This paper investigates the importance of bidder types and product types in online charity auctions. Through a large-scale controlled field experiment, the authors identify charitable and non-charitable bidders, and investigate bidding activities in charity and non-charity auctions. Results show that charitable bidders are willing to pay a significant premium in charity auctions, and bid more persistently, continuing to bid in future charity auctions even after losing one. In addition, through the use of a covert agent bidder, this study provides evidence that charitable bidders voluntarily drive up the price in charity auctions, regardless of whether they win the auction. Finally, the authors find that higher value products attain a lower charitable premium relative to their retail value, consistent with diminishing returns to giving.

Relationship preserving multi-attribute reverse auction: A web-based experimental analysis

Repeated use of reverse auction often degrades the buyer–supplier relationship. Theoretical studies show that providing incentive to the losing but competing suppliers can keep them interested to participate in future auctions thereby maintaining a healthy level of competition. We conduct web-based experiments to validate this theoretical observation in multi-attribute reverse auctions. We compare incentive-oriented and standard multi-attribute reverse auctions and demonstrate that the results in the laboratory setting corroborate the theoretical findings. Adopting incentive-oriented mechanism, the buyer is able to provide better utility to suppliers while protecting her own. We conclude that such a mechanism can reduce the negative perception of the suppliers and help build better buyer–supplier relationship in the long run.

Vive Digital: Colombia's Own Approach to Transforming Its Broadband Ecosystem

Many countries have embarked on expansion of their broadband infrastructure following international trends and claims that positively correlate growth in gross national product with growth in the number of broadband accesses. Colombia has adopted an idiosyncratic approach to reduce disparity in broadband access to avoid repeating the existing inequalities in the fixed-line market between large urban centers and small, remote areas. This paper analyses the rationale for Colombia’s “Vive Digital”, the government plan for broadband expansion and other ICT-related initiatives. In particular, it examines the development of the public–private partnership that currently expands the country’s broadband capacity through the build-up of a fiber-based backbone, the proposed modifications to spectrum designation, the future 4G auction process, and the goals of the plan to improve the provision of electronically mediated services. Finally, we question the potential of the mechanisms employed to solidify the so-called “broadband ecosystem”. Conclusions put in perspective the dual role of the government in incentivizing the supply side of the broadband market and in subsidizing its demand side.

3G spectrum auction aftermarket network deployment

This study empirically examines national 3G spectrum assignments for the years 2000–2007 to identify the sources and inhibitors of aftermarket network deployment. The analysis reveals that variables controlled by regulators have conflicting impacts on the deployment probability. In particular, placing more than one licence bid and stringent minimum prices enhance deployment. Conversely, encouraging entry and mandating infrastructure sharing discourage deployment. These findings should inform regulators' calculus in designing future 4G spectrum auctions.

Willingness of farmers to participate in agri-environmental auctions in Finland

AbstractAuctions have been applied in agri-environmental policy, serving as a key tool to overcome information asymmetries and generate important cost savings for governments. The efficiency of agri-environmental auctions depends on ensuring sufficient participation and avoiding a ‘learning by experience’ situation. In designing successful auctions, it is important to acknowledge farmer characteristics that might increase the adaptability of auctions and also recognize whether past experience affects future participation. This paper uses data from an auction experiment conducted in Nurmijarvi, Southern Finland. We account for socio-demographic, spatial and attitude variables and investigate their effect on the probability of past and future auction participation. Due to the small number of actual participants, we employ a relogit model to correct the coefficient estimates derived by a binary logit model. According to the analysis, large-scale farmers are more likely to have participated in the pilot aucti...

Rational Reserve Pricing in Sequential Auctions

A durable asset is sold in a sealed-bid first price auction. The seller sets an undisclosed reservation price. The seller has no prior information respecting the private valuations of the bidders. If no bid exceeds the reservation price, the asset is sequentially auctioned until it is sold. A rational seller will design an intertemporal series of reservation prices that maximize the discounted value of the transaction price. To accomplish this, the seller uses the history of unsuccessful bids to estimate the probability density functions governing the maximum bids at each hypothetical future auction date.

Restoration of stormwater retention capacity at the allotment-scale through a novel economic instrument

Urbanisation results in changes to runoff behaviour which, if not addressed, inevitably degrade receiving waters. To date, most stormwater management has focussed on the streetscape and public open space. Given that much of the catchment imperviousness is located on private land, we developed and tested a novel economic instrument (a uniform price auction) for encouraging allotment-scale stormwater retention. We evaluated bids using an integrated environmental benefit index (EBI), based on the ability of the proposed works to reduce runoff frequency, pollutant loads and to reduce potable water demand. The uniform price auction resulted in 1.4 ha of impervious areas being effectively 'disconnected' from the stormwater system. The EBI provided an objective and transparent method of comparing bids, which varied in the type of works proposed (e.g. rainwater tank, rain-garden), the cost and the resulting environmental benefit. Whilst the pilot auction was a success, the public subsidy of works undertaken was around 85%, meaning that property owners a relatively small private benefit in the works. Future auction rounds will be revised to (i) test an EBI which is more focussed on the protection of streams (assessing changes to runoff frequency, baseflow volumes and water quality) and (ii) provide an auction process which is simpler to understand, and provides greater practical support for landholders who wish to undertake works.

Re-Auction of the D Block: A Review of the Arguments

This paper demonstrates the problems behind the plan to reauction the D Block for commercial purposes. First, a re-auction of the D Block is unlikely to generate $3 billion in revenues as some believe. Statistical analysis of auction data indicates that a 10 MHz block of spectrum in the 700 MHz band must be unencumbered to produce $3 billion in revenues. However, the FCC’s National Broadband Plan envisions a number of significant encumbrances on the re-auction of the D Block that have reduced auction revenue in the past. Second, the Phoenix Center points out that the re-auction of the D Block cannot fully fund the public safety network – not even close. A nationwide public safety network is expected to cost about $10 to $13 billion. The D Block re-auction offers no other mechanism by which to generate funds for the remaining network construction and operating costs. Third, the report considers the potential broader adverse market effects of a D Block re-auction. The evidence indicates that the public safety community needs a full 20 MHz of spectrum. If given only 10 MHz today as a result of a re-auction of the D Block, then the additional 10 MHz must be obtained from either future spectrum assignments or the capacity equivalent thereof obtained via burdensome public safety use of commercial spectrum. This alternate block of spectrum will not be contiguous to the existing 10 MHz public safety block as is the D Block, which has the effect of increasing the deployment cost of the public safety network by an estimated $4 billion relative to the D Block assignment. Filling the public safety spectrum shortage with public safety obligations on commercial providers could substantially reduce future auction revenues.

Revenues from a Possible Spectrum Incentive Auction: Why the CTIA/CEA Estimate is Not Reliable

Efforts to estimate revenues from future spectrum auctions are fraught with difficulties. Revenues depend heavily on specific auction characteristics, such as bidding structures and the geographic features of the licenses at auction, making it difficult to use past results to predict future outcomes. Predicting revenues from incentive auctions raises even greater challenges, since the net revenues received by the government depend on the nature and magnitude of the “incentives” offered to current licensees. Based on the information currently available about the FCC’s proposal to use incentive auctions to repurpose spectrum for mobile wireless use, the revenues that might be produced by such an auction are unknowable with any degree of precision.

Do Investors Learn from Experience? Evidence from Frequent IPO Investors

We examine how experience affects the decisions of individual investors and institutions in IPO auctions to bid in subsequent auctions, and their bidding returns. We track bidding histories for all 31,476 individual investors and 1,232 institutional investors across all 84 IPO auctions during the period from 1995 to 2000 in Taiwan. For individual bidders, (1) high returns in previous IPO auctions increase the likelihood of participating in future auctions; (2) bidders' returns decrease as they participate in more auctions; (3) auction selection ability deteriorates with experience; and (4) those with greater experience bid more aggressively. These findings are consistent with naive reinforcement learning wherein individuals become unduly optimistic after receiving good returns. In sharp contrast, there is little sign that institutional investors exhibit such behavior. The Author 2011. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oup.com., Oxford University Press.

Sequential auctions with randomly arriving buyers

We analyze a dynamic market in which buyers compete in a sequence of private-value auctions for differentiated goods. New buyers and new objects may arrive at random times. Since objects are imperfect substitutes, buyersʼ values are not persistent. Instead, each buyerʼs private value for a new object is a new independent draw from the same distribution. We consider the use of second-price auctions for selling these objects, and show that there exists a unique symmetric Markov equilibrium in this market. In equilibrium, buyers shade their bids down by their continuation value, which is the (endogenous) option value of participating in future auctions. We characterize this option value and show that it depends not only on the number of buyers currently present on the market and the distribution of their values, but also on anticipated market dynamics.

A New Auction for Substitutes: Central-Bank Liquidity Auctions, 'Toxic Asset' Auctions, and Variable Product-Mix Auctions

This paper was revised as: The Product-Mix Auction: a New Auction Design for Differentiated Goods The “Product-Mix Auction” is a single-round auction that can be used whenever an auctioneer wants to sell (or buy) multiple differentiated goods. It allows all participants to express their preferences between varieties, as well as for alternative quantities of specific varieties. Bidders simultaneously make sets of bids. Each of a bidder’s bids can be an OR” bid that offers a different price for each different variety, and the auction then accepts at most one of the offers from each bid (whichever is best for the bidder given the prices that the auction sets). The graphical solution method makes the operation and merits of the auction easy to explain. The auction is more efficient, and less sensitive to market power, than either running a separate auction for each different variety or running a combined auction with predetermined price differences between varieties. It is also faster, less vulnerable to collusion, and can be easier to use and understand than a simultaneous multiple round auction (SMRA). Moreover, unlike in an SMRA, the auctioneer can specify how the quantities to be sold will depend on the auction prices, by choosing supply functions across varieties. Related material is at www.paulklemperer.org. I invented the auction for the Bank of England when it consulted me at the beginning of the financial crisis in 2007. It now uses it regularly to auction loans of funds secured against different varieties of collateral. The Bank’s first implementation corresponds closely to the description in section 2; the then-Governor, Mervyn King, told the Economist that “[the Product-Mix Auction] is a marvellous application of theoretical economics to a practical problem of vital importance to financial markets” I also advised the Bank on the updated version it introduced in 2014. This permits more dimensions (i.e., more “varieties” of goods), and also allocates an endogenous total quantity. Simple linear-programming methods are now used to solve the auction. The current Governor, Mark Carney, announced plans for greater use of the auction. Future auctions may use others of the enhancements described in section 3. The Guardian newspaper published a 5 minute video including an interview with then-Deputy Governor, Paul Tucker here: www.economics.ox.ac.uk/index.php/General-News/how-geometry-came-to-the-rescue-during-the-banking-crisis-video

Optimal Lot Sizing Policies For Sequential Online Auctions

This study proposes methods for determining the optimal lot sizes for sequential auctions that are conducted to sell sizable quantities of an item. These auctions are fairly common in business to consumer (B2C) auctions. In these auctions, the tradeoff for the auctioneer is between the alacrity with which funds are received, and the amount of funds collected by the faster clearing of inventory using larger lot sizes. Observed bids in these auctions impact the auctioneer's decision on lot sizes in future auctions. We first present a goal programming approach for estimating the bid distribution for the bidder population from the observed bids, readily available in these auctions. We then develop models to compute optimal lot sizes for both stationary and non-stationary bid distributions. For stationary bid distribution, we present closed form solutions and structural results. Our findings show that the optimal lot size increases with inventory holding costs and number of bidders. Our model for non-stationary bid distribution captures the inter-auction dynamics such as the number of bidders, their bids, past winning bids, and lot size. We use simulated data to test the robustness of our model.

Sequential Auctions with Information About Future Goods

When capacity-constrained bidders have information about a good sold in a future auction, they need to take the information into account in forming today's bids. The capacity constraint makes even otherwise unrelated objects substitutes and creates an equilibrium link between future competition and current bidding strategy. This paper proves the existence and uniqueness of a symmetric pure-strategy equilibrium under mild conditions on the population distribution of valuations, characterizes general properties of the equilibrium bidding strategy, and provides a simple technique for numerically approximating the bidding strategy for arbitrary valuation distributions. The key property of the equilibrium is that almost all bidders submit positive bids in the first stage, thereby ensuring trade with probability one. Even bidders who strongly prefer the second object submit a positive bid in the first auction, because losing the first auction is informative about the remaining competitors who also lost, and losing with a low bid indicates that these competitors are quite strong. Because of the guaranteed trade, the sequential auction with information about future goods is a very efficient trading mechanism, achieving more than 98 percent of the potential gains from trade across a wide variety of settings.

Mergers in Auctions with an Incumbent Advantage

When the winner of one auction gains a cost advantage in the next, bids reflect not only the value of winning the auction, but also the value of gaining an incumbent advantage in future auctions. If a larger firm's advantage derives from a cost or product advantage, it has a greater chance of holding onto incumbency status which, in turn, increases the value it places on gaining incumbency. As a consequence, larger firms bid more aggressively than their smaller rivals, where size is measured by the probability of winning. In this environment, mergers eliminate competition among the merged firms but they also change bidding behavior by both merging and non-merging firms. Computational experiments suggest that the scope for pro-competitive mergers is much wider than in auctions without an incumbent advantage. In particular, mergers among smaller firms are likely to be pro-competitive because they tend to create better losers, i.e., firms who bid more aggressively but still lose a large part of the time.

Microstructure Bluffing with Nested Information

Chakraborty and Yilmaz (2004a, b) con? sider strategic models of repeated trading an informed insider with long-lived private infor? mation. They show that, if market makers face uncertainty about the existence of informed trades in the order flow then, with sufficiently many periods of trading, the insider will bluff in every equilibrium in the precise sense ruled out in Albert S. Kyle (1985, 1323), i.e., by first destabilizing prices with unprofitable trades made at the nth auction, then recouping the losses and much more with profitable trades at future auctions. By bluffing, the insider adds noise to the market's inference problem and makes prices less sensitive to his trades. In this note, we demonstrate how the scope for profitable bluffing is enhanced the pres? ence of other rational informed traders in the

Commitment in sequential auctioning: advance listings and threshold prices

This paper models sequential auctioning of two perfect substitutes by a strategic seller, who learns about demand from the first-auction price. The seller holds the second auction only when the remaining demand is strong enough to cover her opportunity cost. Bidding in anticipation of such a contingent future auction is characterized, including a sufficient condition for existence of an invertible (increasing symmetric pure-strategy) bidding equilibrium that facilitates the seller’s learning. A unique invertible bidding equilibrium exists for the Dutch auction format, but only when the second auction is sufficiently discounted by the bidders. In the equilibrium, high-valuation bidders shade their bids down as if the second auction were guaranteed. To counter such strategic bidding, the seller would value ex-ante commitment to hold the second auction less often. Three forms of such commitment are analyzed: commitment to list future auctions in advance, commitment to not hold the second auction unless the first price exceeds a publicly announced threshold, and commitment to a reserve-price in the second auction.

Commitment in Sequential Auctioning: Advance Listings and Threshold Prices

This paper models sequential auctioning of two perfect substitutes by a strategic seller, who learns about demand from the first-auction price. The seller holds the second auction only when the remaining demand is strong enough to cover her opportunity cost. Bidding in anticipation of such a contingent future auction is characterized, including a sufficient condition for existence of an invertible (increasing symmetric pure-strategy) bidding equilibrium that facilitates the seller's learning. A unique invertible bidding equilibrium exists for the Dutch auction format, but only when the second auction is sufficiently discounted by the bidders. In the equilibrium, high-valuation bidders shade their bids down as if the second auction were guaranteed. To counter such strategic bidding, the seller would value ex-ante commitment to hold the second auction less often. Three forms of such commitment are analyzed: commitment to list future auctions in advance, commitment to not hold the second auction unless the first price exceeds a publicly announced threshold, and commitment to a reserve-price in the second auction.

STRATEGI PENGEMBANGAN BISNIS BIBIT TANAMAN HUTAN (KASUS PT SARBI MOERHANI LESTARI, BOGOR)

The research was aimed to identification and analyze internal and external condition that influence the business development in PT Sarbi Moerhani Lestari and to formulate the correct strategic in order to develop the business. The research was conducted in PT Sarbi Moerhani Lestari for 2 months since April until June 2007. The method used was case study by purposive sampling by collected primary and secondary data. The data was analyze by IFE matrix, EFE matrix, IE matrix, SWOT, and AHP (Analitical Hierarchy Process). The result from identification of internal factor showed that the main strenght is administration completeness with score is 0,368 . And the main weakness is dependence of government market with score is 0,088. Meanwhile, from identification of external factor showed that the main oportunity is the future auction system with technical and cost spesification, and the main threat is auction system with the lowest cost assesment..Competitive position of company from the result of IE matrix showed that the position in V cell. It means that company have average internal condition and the company’s response of external condition is middle. From all alternative strategic, the first priority is increasing time and cost efficiency based on company environment change to over come the competition and low price of forest plant seed with priority score is 0,378.