<html><body style="font-family: 'Helvetica Neue',Helvetica,Arial,sans-serif; font-size: 12px;"><div>Hi Donna,</div><div>Tx for the question. In a true Vickery Auction, the parties don't know who they are bidding against. Everyone then has the opportunity to bid what they think the TLD is worth to them -- without knowledge of who they are bidding against. A bidder can't raise the bid knowing they are bidding against a small party, a single TLD, or a Global South applicant. </div><div><br /></div><div>That means that the bids, overall, are lower. Hopefully, this will allow the occasional small party, single TLD, or Global South applicant may win -- and that's one of the goals we have sent for our program. </div><div><br /></div><div>Again, appreciate your question. </div><div>Best, Kathy</div><blockquote><br /></blockquote><blockquote><br />----- Original Message -----<br /><div style="width:100%;background:rgb(228,228,228);"><div style="font-weight:bold;">From:</div> "Austin Donna" <Donna.Austin@team.neustar></div><br /><div style="font-weight:bold;">To:</div>"Kathy Kleiman" <kathy@kathykleiman.com>, "gnso-newgtld-wg@icann.org" <gnso-newgtld-wg@icannorg><br /><div style="font-weight:bold;">Cc:</div><br /><div style="font-weight:bold;">Sent:</div>Wed, 8 Jul 2020 15:33:49 +0000<br /><div style="font-weight:bold;">Subject:</div>RE: [Gnso-newgtld-wg] Vickey auctions<br /><br /><br /><div class="WordSection1">
<p class="MsoNormal"><span style="font-size:11pt;font-family:Calibri, sans-serif;color:#1F497D;">Kathy</span></p><p></p><p></p>
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<p class="MsoNormal"><span style="font-size:11pt;font-family:Calibri, sans-serif;color:#1F497D;">The Vickrey auction model may be inherently expedient, but I’m still not convinced that it is inherently fair particularly among players large and small. I’m
interested to understand how you think this is the very best way to ensure that smaller parties can prevail from time to time and that the Global South can obtain a share of new gTLDs.
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<p class="MsoNormal"><span style="font-size:11pt;font-family:Calibri, sans-serif;color:#1F497D;">Donna</span></p><p></p><p></p>
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<p class="MsoNormal"><b><span style="font-size:11pt;font-family:Calibri, sans-serif;">From:</span></b><span style="font-size:11pt;font-family:Calibri, sans-serif;"> Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org]
<b>On Behalf Of </b>Kathy Kleiman<br /><b>Sent:</b> Monday, July 06, 2020 7:30 AM<br /><b>To:</b> gnso-newgtld-wg@icann.org<br /><b>Subject:</b> [Gnso-newgtld-wg] Vickey auctions</span></p><p></p><p></p>
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<p class="MsoNormal"><span style="font-size:9pt;font-family:Helvetica, sans-serif;">Hi All,</span></p><p></p><p></p>
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<p class="MsoNormal"><span style="font-size:9pt;font-family:Helvetica, sans-serif;">For days and months we discussed auctions and ways to improve them. One thing we learned is that Vickrey auctions are inherently fair. They provide a process that encourages
bidders to bid the price that is fair to them -- and set out exactly what they are willing to pay. They avoid collusion and unfair dealing. I thought we had agreed to recommend this method -- a sealed bid at the time of application. </span></p><p></p><p></p>
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<p class="MsoNormal"><span style="font-size:9pt;font-family:Helvetica, sans-serif;">I want to reintroduce some of what we learned about Vickrey Auctions in our long discussions -- and why they are a trusted method of auctions among players large and small
and with an array of resources. I think it is the very best way to ensure that smaller parties can prevail from time to time, and that the Global South can obtain a share of new gTLDs. </span></p><p></p><p></p>
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<p class="MsoNormal"><span style="font-size:9pt;font-family:Helvetica, sans-serif;">Best, Kathy</span></p><p></p><p></p>
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<h2><span style="font-family:Helvetica, sans-serif;">What is a Vickrey Auction?</span></h2><p></p>
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<p><a href="https://urldefense.com/v3/__https:/corporatefinanceinstitute.com/resources/knowledge/other/vickrey-auction/__;!!N14HnBHF!owM79hXrIldCESZnBUdA6FpA7CuFv2fr6Q6QHzhAgMoYrXoCxFqRe6V5LVNMOZQ2c9sc%24"><span style="font-size:9pt;font-family:Helvetica, sans-serif;">https://corporatefinanceinstitute.com/resources/knowledge/other/vickrey-auction/</span></a><span style="font-size:9pt;font-family:Helvetica, sans-serif;"></span></p><p></p><p></p>
<p><span style="font-size:9pt;font-family:Helvetica, sans-serif;">A Vickrey auction is a sealed-bid auction where bidders submit bids without knowing the bids of other people. However, as opposed to other sealed-bid auctions, the price paid is the second-highest
bid price and not the winning bid price. The Vickrey auction was named after William Vickrey, a Canadian who won the 1996 Nobel Prize in Economics for his research on
</span><a href="https://urldefensecom/v3/__https:/corporatefinanceinstitute.com/resources/knowledge/finance/asymmetric-information/__;!!N14HnBHF!owM79hXrIldCESZnBUdA6FpA7CuFv2fr6Q6QHzhAgMoYrXoCxFqRe6V5LVNMOdllQwyz%24" title=""><span style="font-size:9pt;font-family:Helvetica, sans-serif;">asymmetric
information</span></a><span style="font-size:9pt;font-family:Helvetica, sans-serif;"> in economics.</span></p><p></p><p></p>
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<h3><span style="font-family:Helvetica, sans-serif;">Understanding a Vickrey Auction</span></h3><p></p>
<p><span style="font-size:9pt;font-family:Helvetica, sans-serif;">In a Vickrey auction, the individual is bidding their true value and are not trying to assess what everyone else is going to bid. Therefore, in a Vickrey auction, the individual is bidding
the maximum amount they are willing to pay and are not disadvantaged by it.</span></p><p></p><p></p>
<p><span style="font-size:9pt;font-family:Helvetica, sans-serif;">By utilizing the
</span><a href="https://urldefense.com/v3/__https:/www.researchgate.net/publication/228296863_How_Good_is_the_Generalized_Second-Price_Mechanism__;!!N14HnBHF!owM79hXrIldCESZnBUdA6FpA7CuFv2fr6Q6QHzhAgMoYrXoCxFqRe6V5LVNMOS7ZLYJt%24"><span style="font-size:9pt;font-family:Helvetica, sans-serif;">second-price
mechanism</span></a><span style="font-size:9pt;font-family:Helvetica, sans-serif;"> in a Vickrey auction, individuals bid truthfully – individuals are motivated to bid their maximum value because the individual understands that if their bid wins, they will
only need to pay the second-highest bid value.</span></p><p></p><p></p>
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