Auctions, Market Mechanisms, and Their Applications. Second International ICST Conference, AMMA 2011, NewYork, NY, USA, August 22-23, 2011, Revised Selected Papers

Research Article

Hierarchical Package Bidding: Computational Complexity and Bidder Behavior

Download69 downloads
  • @INPROCEEDINGS{10.1007/978-3-642-30913-7_9,
        author={Riko Jacob and Tobias Scheffel and Georg Ziegler and Martin Bichler},
        title={Hierarchical Package Bidding: Computational Complexity and Bidder Behavior},
        proceedings={Auctions, Market Mechanisms, and Their Applications. Second International ICST Conference, AMMA 2011, NewYork, NY, USA, August 22-23, 2011, Revised Selected Papers},
        proceedings_a={AMMA},
        year={2012},
        month={10},
        keywords={combinatorial auctions computational complexity bidding languages bidder behavior},
        doi={10.1007/978-3-642-30913-7_9}
    }
    
  • Riko Jacob
    Tobias Scheffel
    Georg Ziegler
    Martin Bichler
    Year: 2012
    Hierarchical Package Bidding: Computational Complexity and Bidder Behavior
    AMMA
    Springer
    DOI: 10.1007/978-3-642-30913-7_9
Riko Jacob1, Tobias Scheffel1, Georg Ziegler1,*, Martin Bichler1
  • 1: TU München
*Contact email: zieglerg@in.tum.de

Abstract

Hierarchical package bidding (HPB) is the first combinatorial auction format used by the US Federal Communications Commission (FCC) for the sale of spectrum. This can be considered a major breakthrough after more than 14 years of discussion on the design of a combinatorial auction for the FCC. In HPB, all licenses are prepackaged in a hierarchical manner and bidders can only submit OR-bids on packages defined in this hierarchy, which leads to linear time complexity of the winner determination. A strength of HPB and a reason for the choice by the US FCC was this computational simplicity when determining the allocation and ask prices. While HPB allows more expressiveness than the Simultaneous Multiround Auction (SMR), the number of allowed package bids is restricted by the hierarchy imposed on the items by the auctioneer. Obviously, if the hierarchy does not fit the bidders’ preferences, the OR bidding language of HPB can cause exposure problems as in a simultaneous auction with complementary valuations, and similar equilibrium strategies apply as in SMR. So far, the analysis of HPB is limited to a set of laboratory experiments conducted by Goeree and Holt.