Dave Porter: Clock Auctions 1 A Computationally Friendly Combinatorial Auction: Why Ask Wochnick When You Can Watch The Clock Tick? David Porter, Stephen Rassenti and Vernon Smith Interdisciplinary Center for Economics Science George Mason University March 13, 2016March 13, 2016March 13, 2016

Dave Porter: Clock Auctions2 Costs of Using Combinatorial Auctions Computation Computation Solution Time Solution Time Complexity Complexity Cognitive and Participation Costs Cognitive and Participation Costs Placing Bids Placing Bids Interpreting Results (Transparency) Interpreting Results (Transparency) Incentives Incentives Strategic Bidding Strategic Bidding Threshold Threshold

Dave Porter: Clock Auctions3 Combinatorial Auctions with Price Information Determine accepted and rejected bids (Primal) Determine accepted and rejected bids (Primal) Signals are based on pseudo-dual prices Signals are based on pseudo-dual prices Prices that signal rejection Prices that signal rejection Prices that signal acceptance Prices that signal acceptance Ambiguous signals Ambiguous signals

Dave Porter: Clock Auctions4 Combinatorial Auctions with Price Information Trade-offs Trade-offs Computation Computation Still an issue Still an issue Complexity Complexity Prices help guide decisions Prices help guide decisions Prices are not perfectly transparent: still need to ask Wochnick Prices are not perfectly transparent: still need to ask Wochnick Incentives Incentives Experiments Experiments Harder (overlaps/synergies)problems have higher efficiencies Harder (overlaps/synergies)problems have higher efficiencies

Dave Porter: Clock Auctions5 Clock Auction Clock Auctions Clock Auctions Eliminate Jump Bidding Eliminate Jump Bidding Simplicity Simplicity Features Features Price Posted Price Posted Demand Registered Demand Registered Prices Increased based on Excess Demand Prices Increased based on Excess Demand No IDs, etc. No IDs, etc.

Dave Porter: Clock Auctions6 Combinatorial Clock Auction Basic Design Features (1999) Basic Design Features (1999) Prices per object Prices per object Submit demand (packed, etc.) Submit demand (packed, etc.) Excess Demand i = Number of Participants bidding on i Excess Demand i = Number of Participants bidding on i Increase Price until only 0 or 1 for each excess demand Increase Price until only 0 or 1 for each excess demand Fill by doing full optimization Fill by doing full optimization If 1 is reallocated  excess demand If 1 is reallocated  excess demand

Dave Porter: Clock Auctions7 Combinatorial Clock Auction Tradeoffs Tradeoffs Computation Computation No Computation required until end No Computation required until end Good Upper bound Good Upper bound Dominated bids calculation during rounds Dominated bids calculation during rounds Complexity Complexity Price information guidance is unambiguous Price information guidance is unambiguous Incentives? Incentives?

Dave Porter: Clock Auctions8 Experiments with the Clock Environments Environments

Dave Porter: Clock Auctions9 Experiments with the Clock Environments Environments

Dave Porter: Clock Auctions10 Auction Treatments Mechanisms Mechanisms SMR SMR Combo Auction (Plott) Combo Auction (Plott) Clock Clock

Dave Porter: Clock Auctions11 Results Case JoinOwnAuction% Allocation Efficiency 1.81YesClock100,100,100 Plott78, 79, 78 SMR NoCC100,100,100 Plott97, 79 SMR YesCC100,100,100,100 Plott100, 100 SMR70 2a.80YesCC100,100,99,100,99,100 Plott99, 99, 99, 95, 94, 95, 95 SMR100, 99, 95, 95 2b.94YesCC100,100,100 Plott91, 94, 94 SMR100 2b.94NoCC100,100,100 Plott95, 95 SMR100 2b.80YesCC100,100,100 Plott100, 91 SMR100

Dave Porter: Clock Auctions12 Extensions Moving the Clocks Moving the Clocks OR/Eliminate past rounds OR/Eliminate past rounds Dealing with budget constraints Dealing with budget constraints Exchange Exchange Seller commitment and buy-back Seller commitment and buy-back