cs234r Markets for Networks and Crowds B RENDAN L UCIER, M ICROSOFT R ESEARCH NE N ICOLE I MMORLICA, M ICROSOFT R ESEARCH NE

Lecture 8: Milgrom and Segal. Deferred Acceptance Auctions and Radio Spectrum Reallocation. Preliminary version in Economics and Computation (EC), 2015.

FCC Spectrum Allocation

FCC Spectrum (Re)-allocation Upcoming Auction: Reallocate spectrum from UHF TV broadcasters, to reuse for wireless broadband services FCC acts as an intermediary: purchase spectrum from some TV stations, pack the remaining stations into a smaller set of channels, then sell acquired spectrum to wireless providers

FCC Spectrum (Re)-allocation Upcoming Auction: (started March 29, 2016) Reallocate spectrum from UHF TV broadcasters, to reuse for wireless broadband services FCC acts as an intermediary: purchase spectrum from some TV stations, pack the remaining stations into a smaller set of channels, then sell acquired spectrum to wireless providers Ongoing

FCC Spectrum (Re)-allocation A combinatorial procurement problem: Purchase spectrum from the TV stations with the least value, (we’re buying not selling) subject to the constraint that the remainder can be packed into a given amount of spectrum. … could we use VCG?

FCC Spectrum (Re)-allocation Difficulty: complex repacking constraints! Thousands of participants, 100k’s of pairwise constraints. Difficult to check if a given set of stations is a feasible solution. Source: Layton-Brown and Fréchette (2015)

Deferred Acceptance Auction Goal: handle complex constraints gracefully, AND maintain good incentive properties. This paper: analyzes a deferred acceptance auction, which proceeds in rounds, for the procurement side of the auction. Punchline: the auction is “obviously” strategyproof, coalition-proof, and can be tuned for good welfare and revenue properties.

Deferred Acceptance Auction The Auction: 1.Start with a high price, p. All stations want to sell at price p. 2.Begin reducing the price. At any time, a station can indicate they no longer wish to sell. They are then OUT, and will be repacked. 3.For each station, determine if they can feasibly be repacked. If not, their price is frozen – we will buy from them, at the current price. 4.Continue until all stations are OUT or frozen.

Deferred Acceptance Auction Note: the price p can be interpreted multiple different ways: Absolute payment Payment per person in broadcast radius Payment per other station interfered with … Each corresponds to a different greedy heuristic. Approach is flexible – could use any of these.

Deferred Acceptance Auction Properties: “Obviously” strategyproof: at each stage, only need to decide if value is greater than p or not. Weakly group strategyproof (i.e., coalition-proof): no group of bidders can collude and become better off as a whole.

Deferred Acceptance Auction Properties (con’t) Not necessarily efficient – it implements a greedy heuristic. But simulations, dry-runs suggest that such heuristics work well in practice. NP-hard to check feasibility. But specially-tailored solvers can solve “most” instances. See Layton- Brown and Fréchette (2015). We simply treat “unsolved” instances as infeasible.

Informal Discussion: Take-away: A practical heuristic, currently being used to execute a high-stakes reallocation auction. Questions: Other auctions? How about ascending-price? Auction to sell spectrum to wireless providers? What if broadcasters own multiple towers?