[Gnso-newgtld-wg] Vickey auctions

Kathy Kleiman kathy at kathykleiman.com
Thu Jul 9 17:12:14 UTC 2020


Hi Donna,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. 
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. 
Again, appreciate your question. Best, Kathy

----- Original Message -----
From: "Austin Donna" 
To:"Kathy Kleiman" , "gnso-newgtld-wg at icann.org" 
Cc:
Sent:Wed, 8 Jul 2020 15:33:49 +0000
Subject:RE: [Gnso-newgtld-wg] Vickey auctions

	Kathy

	 

	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. 

	 

	Donna

	 

	FROM: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces at icann.org] ON
BEHALF OF Kathy Kleiman
SENT: Monday, July 06, 2020 7:30 AM
TO: gnso-newgtld-wg at icann.org
SUBJECT: [Gnso-newgtld-wg] Vickey auctions

	 

	Hi All,

	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. 

	 

	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. 

	 

	Best, Kathy

	-----------------------------------------------------------------------------------------------------------------------------

	 

WHAT IS A VICKREY AUCTION?

	https://corporatefinanceinstitute.com/resources/knowledge/other/vickrey-auction/
[1]

	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 asymmetric information [2] in economics.

UNDERSTANDING A VICKREY AUCTION

	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.

	By utilizing the second-price mechanism [3] 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.

	 

	 

	   

Links:
------
[1]
https://urldefense.com/v3/__https:/corporatefinanceinstitute.com/resources/knowledge/other/vickrey-auction/__;!!N14HnBHF!owM79hXrIldCESZnBUdA6FpA7CuFv2fr6Q6QHzhAgMoYrXoCxFqRe6V5LVNMOZQ2c9sc%24
[2]
https://urldefense.com/v3/__https:/corporatefinanceinstitute.com/resources/knowledge/finance/asymmetric-information/__;!!N14HnBHF!owM79hXrIldCESZnBUdA6FpA7CuFv2fr6Q6QHzhAgMoYrXoCxFqRe6V5LVNMOdllQwyz%24
[3]
https://urldefense.com/v3/__https:/www.researchgate.net/publication/228296863_How_Good_is_the_Generalized_Second-Price_Mechanism__;!!N14HnBHF!owM79hXrIldCESZnBUdA6FpA7CuFv2fr6Q6QHzhAgMoYrXoCxFqRe6V5LVNMOS7ZLYJt%24

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