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FCC auctions spur interest in auction design

Research Achievements

FCC auctions spur interest in auction design

The Federal Communications Commission (FCC) spectrum auctions stimulated tremendous research interests in complex auction design. Economic research on package auction mechanisms helps policy makers choose the optimal mechanism.

We study a new ascending bid auction format, iBEA, which has superior theoretical properties than other ascending bid auctions, and evaluate its performance against the sealed bid Vickrey auction in the laboratory. We find that, while the Vickrey auction generates significantly higher revenue than does iBEA, the iBEA auction generates significantly higher bidder profit and efficiency. Additionally, a significantly larger proportion of iBEA auctions achieves 100% efficiency than does the Vickrey auction, indicating that iBEA achieves good performance outcomes in the lab and should be tested in the field. (Chen and Takeuchi, 2010)