June 4th, 2008Spectrum Auction – Chart Sanity?
Reader Bruce Kirby quite rightly points out:
While the lovely chart of chaos you should is colourful, it’s also misleading. During an auction like this, high bids at any given point in time don’t mean much, for two reasons. First, when there are multiple bids on a licence the “high” bid is selected randomly. Second, the auction is structured so that the previous high bidder on a licence does not bid on that licence in the following round, and so will always lose that high bid if anyone else chooses to submit a bid at the next increment.
As a result, showing just high bids will look like chaos because bidders will oscillate up and down as they “win” a licence one round and lose it the next.
More informative is to look at a bidder’s activity in any given round — the sum of the high bids from the previous round and the new bids it submitted. This smoothes out the oscillation and shows a truer (but
less chaotic) picture.The attached charts show this for the larger players through round 20. There are two versions — one showing total $ (how much their bids add up to) and the other showing bid points (relevant to understanding where everyone is positioned and what their options are going forward in the auction given that points must be used to be kept).
As you can see, there has been some fluctuation in activity, but hardly chaos.
Plotted out colorfully, here’s what that data looks like up to round 20. Thanks Bruce!
