# Presentation: 665079

## BUILDING A SPECTRUM AUCTIONSYSTEM

**BUILDING A SPECTRUM AUCTION****SYSTEM**

## N O N P A C K A G E     B I D D I N G

**1995 FIRST AUCTION**

**BID ENTRY CHANGES**

**NEW BID INCREMENTCALCS**

**WEB BASED BIDDING**

## N O N P A C K A G E     B I D D I N G

- P  A  C  K  A  G  E      B  I  D  D  I  N  G

**ANNOUNCE AUCTION 31 DESIGN**

**TIE BREAKING**

**SMOOTHED ANCHORING****PRICING**

**CORE REDESIGN**

**1995 FIRST AUCTION**

**BID ENTRY CHANGES**

**NEW BID INCREMENTCALCS**

**WEB BASED BIDDING**

## N O N P A C K A G E     B I D D I N G

- P  A  C  K  A  G  E      B  I  D  D  I  N  G

**ANNOUNCE AUCTION 31 DESIGN**

**TIE BREAKING**

**SMOOTHED ANCHORING****PRICING**

**CORE REDESIGN**

**1995 FIRST AUCTION**

**BID ENTRY CHANGES**

**NEW BID INCREMENTCALCS**

**WEB BASED BIDDING**

- INTEGRATED SPECTRUM

- AUCTION SYSTEM

**ISAS**

## ISAS PACKAGE BIDDING AUCTION DESIGN

**ISAS PACKAGE BIDDING AUCTION DESIGN**

## Auction Mechanism

- Simultaneous Multiple Round
- Activity and Eligibility Rules
- Closing Rules:
- Discretionary
- 1 or 2 Round Simultaneous

- Simultaneous Multiple Round
- Activity and Eligibility Rules
- Closing Rule:
- 2 Round Simultaneous

***ISAS***

***AUCTION 51***

## Package Creation

- Bidders can create any combination of two or more items subject to:
- Items were selected on application form
- Current eligibility
- Bidders can create a similar package from one of its existing packages

- Bidders can create any combination of two or more items subject to:
- Items were selected on application form
- Current eligibility

***ISAS***

***AUCTION 51***

## Bidding Language

- XOR
*All* bids of a bidder are mutually exclusive
- A bidder can win *at most one* of its bids

- XOR of OR
- Bids of a bidder are mutually exclusive *between rounds*
- A bidder can win any non-overlapping combination of bids placed in the same round

***ISAS***

***AUCTION 51***

## Minimum Acceptable Bids

- Minimum opening bid amount if not bid on
- MAB of an individual item is its *current price* plus a percentage
- MAB percentage calculated using smoothing
- MAB of a package is the sum of the MABs of the items in the package
- Fixed MAB percentage for global package (optional)

- The MAB of an item or package is the greater of:
- Minimum opening bid amount of the item/package
- Bidder’s previous high bid on the item/package plus x%
- Current price estimate of the item/package plus z%
- CPE of a package is the sum of the CPEs of the items in the package
- Fixed MAB percentage for global package (optional)

***ISAS***

***AUCTION 51***

## Increment Bids

- Variable number of increment bid amounts allowed
- Increment calculated as a fixed percentage of the MAB
- Increment bid amounts calculated as MAB + k*increment

- Variable number of increment bid amounts allowed
- Increment calculated as a fixed percentage of the MAB
- Increment bid amounts calculated as MAB + k*increment

***ISAS***

***AUCTION 51***

## Placing Bids

- Click-box
- Simultaneous submission
- Limited by current eligibility
- Bid removals allowed within the same round
- Bid import function

- Click-box
- Simultaneous submission
- Limited by current eligibility
- Bid removals allowed within the same round

***ISAS***

***AUCTION 51***

## Activity Calculations

- Maximum bidding units a bidder can win considering:
- Current provisionally winning bids
- New bids made in the round
- Old bids where the previous bid amount is ≥ to the current MAB
- Calculation requires a sort

- Maximum bidding units a bidder can win considering:
- Current provisionally winning bids
- New bids made in the round
- Renewed provisionally winning bids
- Calculation requires an optimization problem to be solved

***ISAS***

***AUCTION 51***

## Activity Reqs & Waivers

- Required activity calculated each round as a fraction of the bidder’s current eligibility
- Waivers can be applied either proactively or automatically or both

- Required activity calculated each round as a fraction of the bidder’s current eligibility
- Waivers applied automatically

***ISAS***

***AUCTION 51***

## Eligibility Reduction

- Bidder’s not meeting required activity will have their eligibility reduced
- Bidder’s can elect to reduce their eligibility
- Reduced eligibility is calculated to bring a bidder in to compliance with its activity requirement

- Bidder’s not meeting their required activity will have their eligibility reduced
- Bidder’s can elect to reduce their eligibility
- Reduced eligibility is calculated to bring a bidder in to compliance with its activity requirement

***ISAS***

***AUCTION 51***

## System Parameters

- Number of packages created
- Number of bids submitted in a round
- Number of considered bids in the auction
- Limits number of combinations that can be bid on but not the number of bids placed

- Number of packages created

***ISAS***

***AUCTION 51***

## Provisionally Winning Bids

- Considered bids:
- For each bidder, the highest bid made on each of its items/packages
- FCC bids on each item
- Maximize revenue subject to constraints
- Ties broken randomly using selection numbers
- No withdrawals

- Considered bids:
- For each bidder, all bids made in the auction
- FCC bids on each item
- Maximize revenue subject to constraints
- Ties broken randomly using selection numbers
- No withdrawals

***ISAS***

***AUCTION 51***

## Last and Best Bids

- No provision for last and best bids

- Two sets of last and best bids
- Last and best bid sets are mutually exclusive
- Etc...

***ISAS***

***AUCTION 51***

## Ideas for Enhancements

- Interface customization
- Sophisticated system help
- Package creation tool
- Bidding tool
- Final proxy round

## Slide 19