Incentive Auction Design Alternatives: A Simulation Study

Abstract

This paper revisits the descending clock “reverse” auction design used in the U.S. Federal Communications Commission’s 2016–2017 “incentive auction.” We use extensive computational simulations to investigate the quantitative significance of various aspects of the design, leveraging a reverse auction simulator and realistic models of bidder values. This paper was accepted by Gabriel Weintraub, revenue management and market analytics. Funding: This work was supported by the Defense Advanced Research Projects Agency [Grant FA8750-19-2-0222 CFDA\# 12.910], the Canadian Institute for Advanced Research [Canada AI Research Chair at the Alberta Machine In], the National Science Foundation [Grant 1525730], and the Canadian Network for Research and Innovation in Machining Technology, Natural Sciences and Engineering Research Council of Canada [Discovery Grant, Discovery Grant Supplement]. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2020.02489 .