Efficiency, auctioneer revenue and bidding behavior in the Combinatorial Clock Auction: An analysis in the context of European spectrum auctions

Magnetic radio spectrum is usually allocated by means of auctions. Mobile operators bid for spectrum licenses which are used to offer communication and data services to their customers. Such spectrum sales are among the biggest trades in terms of revenue, which makes this domain especially interesting for research in the field of market design and auctions. For many years now, the Simultaneous Multi-Round Auction (SMRA) has been the predominant auction format for spectrum sales worldwide. SMRA is compelling due to its simple auction rules and its excellent price discovery, but bidders with complementary valuations are affected by exposure risk. This causes bidders to apply bidding strategies and various forms of signaling which jeopardize efficiency. The recently introduced Combinatorial Clock Auction (CCA) has been designed in order to give strong incentives for truthful bidding, which has high efficiency as a result (Cramton, 2009b). It has been used as an alternative to the SMRA in a number of countries. In this thesis, we analyze the performance of CCA in comparison to SMRA and examine bidding behavior in both formats. We have conducted experiments in three different settings closely resembling the settings of European spectrum auctions. We did not find a significantly superior performance of CCA in terms of efficiency. In multiband settings, in which several spectrum bands were sold, the efficiency of CCA was significantly worse than in SMRA. Auctioneer revenue was significantly lower due to unsold items and the payment rule of