Spiteful Bidding and Gaming in Combinatorial Clock Auctions

Combinatorial Clock Auctions (CCAs) have recently been used around the world to allocate mobile telecom spectrum. CCAs are claimed to significantly reduce the scope for strategic bidding. This paper shows, however, that bidding truthfully does not constitute an equilibrium if bidders also have an incentive to engage in spiteful bidding to raise rivals' cost. The restrictions on further bids imposed by the clock phase of a CCA give certainty to bidders that certain bids above value cannot be winning bids, assisting bidders to engage in spiteful bidding.