Combinatorial Clock Auctions
https://www.gsb.stanford.edu/insights/how-smart-bidders-can-manipulate-massive-auctions
In this article, a different type of auction, the combinatorial clock auction, is explained. First, Johnathan Levin and Andrzej Skrazpacz, economics professors at Stanford University, examined spectrum auctions. Spectrum auctions are used when a source, usually the government, auctions the rights to transmit signals over specific bands of the electromagnetic spectrum and to assign scarce spectrum resources. They found that spectrum auctions make it extremely hard to strategize and create the issue or predatory bidding, which occurs when a manufacturer upsells the value of the resources to prevent competitors from bidding on the resources. The combinatorial clock auction allows a preliminary round of bidding, where bidders declare the amount they are willing to pay for the resource, followed by the second round of sealed bids.
After analyzing many of the first combinatorial clock auctions, it was found that these types of auctions can be manipulated. This can occur when bidders initially overbid the resource in order to narrow the interest in the resource before dropping the amount they would actually pay in the second round of the auction. This type of auction is conducted on a large scale, typically for the FCC and other governmental systems. Due to the size of these auctions, it is harder to regulate the manipulation of these systems. This article relates to our discussion of auctions and game theory, where we analyze the potential outcomes and the best strategies used for winning. The combinatorial clock auction resembles the second price auction. Where it is best to bid high to beat your competitors when you will not have to pay the value of your own bid.
Sources: https://en.wikipedia.org › wiki › Spectrum_auction; https://www.quimbee.com › keyterms › predatory-bidding