The behavioural approach to the strategic analysis of spectrum auctions: The case of the German DCS-1800 auction

The behavioural approach can be applied to both the design of an auction as well as to the implementation of a bidding strategy. This paper reports a case study in which we assisted a bidder in the German DCS1800 auction in the preparation for its bidding. We describe the various steps on this path: First, information that may be scattered in the company must be collected and aggregated. From the relevant influential factors, likely scenarios are worked out. These scenarios are the basis for creating the experimental environment for experimental sessions with student subjects. Accompanying sessions are held with company managers, which also serve as first training sessions for the decision makers in the company. The lessons learnt from the data analysis and from the managers’ experiences are integrated into the implementation of a bidding strategy, complemented by theoretical considerations. Finally, training sessions are held to apply the bidding strategy in trial auctions.