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-auct... 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 [1] 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 [2] 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://corporatefinanceinstitute.com/resources/knowledge/finance/asymmetric... [2] https://www.researchgate.net/publication/228296863_How_Good_is_the_Generaliz...
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@icann.org] On Behalf Of Kathy Kleiman Sent: Monday, July 06, 2020 7:30 AM To: gnso-newgtld-wg@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://urldefense.com/v3/__https://corporatefinanceinstitute.com/resources/... <https://urldefense.com/v3/__https:/corporatefinanceinstitute.com/resources/k...> 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<https://urldefense.com/v3/__https:/corporatefinanceinstitute.com/resources/k...> 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<https://urldefense.com/v3/__https:/www.researchgate.net/publication/22829686...> 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.
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@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@icann.org] ON BEHALF OF Kathy Kleiman SENT: Monday, July 06, 2020 7:30 AM TO: gnso-newgtld-wg@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-auct... [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/k... [2] https://urldefense.com/v3/__https:/corporatefinanceinstitute.com/resources/k... [3] https://urldefense.com/v3/__https:/www.researchgate.net/publication/22829686...
Hi Kathy: A fine point: I believe a Vickrey auction is one where the parties don’t know the bids of the other parties bit can know their identities. Regardless of whether a Vickrey, top-price or ascending bid auction model is selected, my concern has to do with the timing of the sealed bid. I can think of nothing more discouraging to a newcomer, investor and potential contributor to the domain name industry than to say, “Pay the $185,000 application fee and, oh yeah, give us a sealed bid for how many millions you will bid in a sealed auction where the delegation might take place months or years from now.” Pile onto that the uncertainty of how the evaluation process will play out and additional costs that might be added, how many bidders there are, who they are, and the relative value of TLDs at some point in the future when the delegations are made. I don’t know of any other auctions that operate in this manner. In other instances, sealed bids are generally required just before the final award. Put another way, requiring the sealed bid at the time of application will greatly discourage new participants — especially smaller ones — from our industry. If we are seeking to encourage competition and choice, then the auction should take place close in time to the delegation — whether the auction is sealed bid - top price, sealed bid - Vickrey, or the clock model applied in the first round. A final point if I may, is that there has been a substantial amount of study done on the benefits and drawbacks to Vickrey auctions — and there have been examples of unintended detrimental results. The articles I read indicate that each instance includes a complex set of issues requiring advice of competent economists prior to selection of a Vickrey mechanism. The SubPro group might have had long discussions regarding this but I do not think they have been appropriately deep or informed by economics science. I do not have an issue as to whether a Vickrey or other form of auction is selected, but think there should be an appropriate study if we are to deviate from the past. Our high-level policy recommendation might be to select an auction model encouraging "individuals bid truthfully” and alert ICANN to consider Vickrey as an alternative to the current model and the need for study as part of the implementation. Maybe ICANN could get that study going now so that it could inform the implementation effort. Thanks this opportunity to speak up everyone. Kurt
On Jul 9, 2020, at 10:12 AM, Kathy Kleiman <kathy@kathykleiman.com> wrote:
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" <Donna.Austin@team.neustar>
To: "Kathy Kleiman" <kathy@kathykleiman.com>, "gnso-newgtld-wg@icann.org" <gnso-newgtld-wg@icannorg> 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@icann.org] On Behalf Of Kathy Kleiman Sent: Monday, July 06, 2020 7:30 AM To: gnso-newgtld-wg@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-auct... <https://urldefense.com/v3/__https:/corporatefinanceinstitute.com/resources/k...>
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 <https://urldefensecom/v3/__https:/corporatefinanceinstitute.com/resources/kn...> 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 <https://urldefense.com/v3/__https:/www.researchgate.net/publication/22829686...> 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.
_______________________________________________ Gnso-newgtld-wg mailing list Gnso-newgtld-wg@icann.org https://mm.icann.org/mailman/listinfo/gnso-newgtld-wg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy (https://www.icann.org/privacy/policy) and the website Terms of Service (https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on.
Hi All, Adding to Kurt, Kathy and Donna’s comments. I feel like we are putting the cart before the horse. I’m not sure how we can adequately discuss auctions until we iron out the auction bid credit/multiplier for Applicant Support applicants as: * Bid credits/multiplier provide incentives to Applicant Support applicants putting other applicants within that contention set at a disadvantage * Auction credits provide financial incentives and the potential of gaming * Potential bid credit maximums may affect bidding methodology * Change the dynamics of resolving a contention set via creative solutions/JVs * Impact all other applicants within that contention set * Sufficient time to prepare and secure additional funding for example, 30 days to submit a bid is unreasonable * Educational component on auction process, bidding strategy, values, funding, etc. One scenario, a contention set of six with one AS applicant, first person lucky enough to enter into a JV with the AS applicant is at an economic advantage and has the trump card to ensure the auction is through ICANN. Depending on your perspective, this may have a positive/negative outcome but we haven’t discussed these types of scenarios or considered the implications and potential safe guards. I’d suggest that we cover off bidding credit/multipliers beforehand so we can have comprehensive discussions in order to develop all-encompassing recommendations. If not, I think we’ll need to return to the auction discussion to address the deficiencies. Cheers, Christa From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org> On Behalf Of Kurt Pritz Sent: July 9, 2020 11:29 AM To: Kathy Kleiman <kathy@kathykleiman.com> Cc: gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] Vickey auctions Hi Kathy: A fine point: I believe a Vickrey auction is one where the parties don’t know the bids of the other parties bit can know their identities. Regardless of whether a Vickrey, top-price or ascending bid auction model is selected, my concern has to do with the timing of the sealed bid. I can think of nothing more discouraging to a newcomer, investor and potential contributor to the domain name industry than to say, “Pay the $185,000 application fee and, oh yeah, give us a sealed bid for how many millions you will bid in a sealed auction where the delegation might take place months or years from now.” Pile onto that the uncertainty of how the evaluation process will play out and additional costs that might be added, how many bidders there are, who they are, and the relative value of TLDs at some point in the future when the delegations are made. I don’t know of any other auctions that operate in this manner. In other instances, sealed bids are generally required just before the final award. Put another way, requiring the sealed bid at the time of application will greatly discourage new participants — especially smaller ones — from our industry. If we are seeking to encourage competition and choice, then the auction should take place close in time to the delegation — whether the auction is sealed bid - top price, sealed bid - Vickrey, or the clock model applied in the first round. A final point if I may, is that there has been a substantial amount of study done on the benefits and drawbacks to Vickrey auctions — and there have been examples of unintended detrimental results. The articles I read indicate that each instance includes a complex set of issues requiring advice of competent economists prior to selection of a Vickrey mechanism. The SubPro group might have had long discussions regarding this but I do not think they have been appropriately deep or informed by economics science. I do not have an issue as to whether a Vickrey or other form of auction is selected, but think there should be an appropriate study if we are to deviate from the past. Our high-level policy recommendation might be to select an auction model encouraging "individuals bid truthfully” and alert ICANN to consider Vickrey as an alternative to the current model and the need for study as part of the implementation. Maybe ICANN could get that study going now so that it could inform the implementation effort. Thanks this opportunity to speak up everyone. Kurt On Jul 9, 2020, at 10:12 AM, Kathy Kleiman <kathy@kathykleiman.com <mailto:kathy@kathykleiman.com> > wrote: 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" <Donna.Austin@team.neustar <mailto:Donna.Austin@team.neustar> > To: "Kathy Kleiman" <kathy@kathykleiman.com <mailto:kathy@kathykleiman.com> >, "gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> " <gnso-newgtld-wg@icannorg> 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@icann.org] On Behalf Of Kathy Kleiman Sent: Monday, July 06, 2020 7:30 AM To: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@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://urldefense.com/v3/__https:/corporatefinanceinstitute.com/resources/k...> https://corporatefinanceinstitute.com/resources/knowledge/other/vickrey-auct... 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 <https://urldefensecom/v3/__https:/corporatefinanceinstitute.com/resources/kn...> asymmetric information 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 <https://urldefense.com/v3/__https:/www.researchgate.net/publication/22829686...> second-price mechanism 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. _______________________________________________ Gnso-newgtld-wg mailing list Gnso-newgtld-wg@icann.org <mailto:Gnso-newgtld-wg@icann.org> https://mm.icann.org/mailman/listinfo/gnso-newgtld-wg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy (https://www.icann.org/privacy/policy) and the website Terms of Service (https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on.
Christa, We already discussed and I believe we agreed as a group to the following recommendations which will be out shortly as part of Package 7: Recommendation xx (rationale 9): If an applicant qualifies for Applicant Support and is part of a contention set that is resolved through an auction of last resort, a bid credit, multiplier, or other similar mechanism must apply to the bid submitted by that applicant. Implementation Guidance xx (rationale 9): Research should be conducted in the implementation phase to determine the exact nature and amount of the bid credit, multiplier, or other mechanism described in recommendation xx. Research should also be completed to determine a maximum value associated with the bid credit, multiplier, or other mechanism. Implementation Guidance xx (rationale 9): If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than three (3) years. This restriction seeks to prevent gaming of the Applicant Support Program whereby an applicant transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, assignments that become necessary for the following reasons shall be permitted: · Assignments due to going out of business · Assignments due to death or retirement of a majority shareholder · Assignments due to EBERO · Assignments to affiliates or subsidiaries · Assignments required by competition authorities All assignments after such time shall be governed under the then-current Registry Agreement standard provisions; provided that any Assignment or Change of Control after the third year, but prior to the seventh (7th) year, shall require the applicant to repay the full amount of financial support received through the ASP Program plus an additional ten percent (10%). Hope that helps. Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com http://jjnsolutions.com<http://jjnsolutions.com/> From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org> On Behalf Of christa@dottba.com Sent: Thursday, July 9, 2020 2:47 PM To: 'Kurt Pritz' <kurt@kjpritz.com>; 'Kathy Kleiman' <kathy@kathykleiman.com> Cc: gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] Vickey auctions Hi All, Adding to Kurt, Kathy and Donna’s comments. I feel like we are putting the cart before the horse. I’m not sure how we can adequately discuss auctions until we iron out the auction bid credit/multiplier for Applicant Support applicants as: * Bid credits/multiplier provide incentives to Applicant Support applicants putting other applicants within that contention set at a disadvantage * Auction credits provide financial incentives and the potential of gaming * Potential bid credit maximums may affect bidding methodology * Change the dynamics of resolving a contention set via creative solutions/JVs * Impact all other applicants within that contention set * Sufficient time to prepare and secure additional funding for example, 30 days to submit a bid is unreasonable * Educational component on auction process, bidding strategy, values, funding, etc. One scenario, a contention set of six with one AS applicant, first person lucky enough to enter into a JV with the AS applicant is at an economic advantage and has the trump card to ensure the auction is through ICANN. Depending on your perspective, this may have a positive/negative outcome but we haven’t discussed these types of scenarios or considered the implications and potential safe guards. I’d suggest that we cover off bidding credit/multipliers beforehand so we can have comprehensive discussions in order to develop all-encompassing recommendations. If not, I think we’ll need to return to the auction discussion to address the deficiencies. Cheers, Christa From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org<mailto:gnso-newgtld-wg-bounces@icann.org>> On Behalf Of Kurt Pritz Sent: July 9, 2020 11:29 AM To: Kathy Kleiman <kathy@kathykleiman.com<mailto:kathy@kathykleiman.com>> Cc: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Vickey auctions Hi Kathy: A fine point: I believe a Vickrey auction is one where the parties don’t know the bids of the other parties bit can know their identities. Regardless of whether a Vickrey, top-price or ascending bid auction model is selected, my concern has to do with the timing of the sealed bid. I can think of nothing more discouraging to a newcomer, investor and potential contributor to the domain name industry than to say, “Pay the $185,000 application fee and, oh yeah, give us a sealed bid for how many millions you will bid in a sealed auction where the delegation might take place months or years from now.” Pile onto that the uncertainty of how the evaluation process will play out and additional costs that might be added, how many bidders there are, who they are, and the relative value of TLDs at some point in the future when the delegations are made. I don’t know of any other auctions that operate in this manner. In other instances, sealed bids are generally required just before the final award. Put another way, requiring the sealed bid at the time of application will greatly discourage new participants — especially smaller ones — from our industry. If we are seeking to encourage competition and choice, then the auction should take place close in time to the delegation — whether the auction is sealed bid - top price, sealed bid - Vickrey, or the clock model applied in the first round. A final point if I may, is that there has been a substantial amount of study done on the benefits and drawbacks to Vickrey auctions — and there have been examples of unintended detrimental results. The articles I read indicate that each instance includes a complex set of issues requiring advice of competent economists prior to selection of a Vickrey mechanism. The SubPro group might have had long discussions regarding this but I do not think they have been appropriately deep or informed by economics science. I do not have an issue as to whether a Vickrey or other form of auction is selected, but think there should be an appropriate study if we are to deviate from the past. Our high-level policy recommendation might be to select an auction model encouraging "individuals bid truthfully” and alert ICANN to consider Vickrey as an alternative to the current model and the need for study as part of the implementation. Maybe ICANN could get that study going now so that it could inform the implementation effort. Thanks this opportunity to speak up everyone. Kurt On Jul 9, 2020, at 10:12 AM, Kathy Kleiman <kathy@kathykleiman.com<mailto:kathy@kathykleiman.com>> wrote: 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" <Donna.Austin@team.neustar<mailto:Donna.Austin@team.neustar>> To: "Kathy Kleiman" <kathy@kathykleiman.com<mailto:kathy@kathykleiman.com>>, "gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@icann.org>" <gnso-newgtld-wg@icannorg> 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@icann.org] On Behalf Of Kathy Kleiman Sent: Monday, July 06, 2020 7:30 AM To: gnso-newgtld-wg@icann.org<mailto:gnso-newgtld-wg@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/<https://urldefense.com/v3/__https:/corporatefinanceinstitute.com/resources/knowledge/other/vickrey-auction/__;!!N14HnBHF!owM79hXrIldCESZnBUdA6FpA7CuFv2fr6Q6QHzhAgMoYrXoCxFqRe6V5LVNMOZQ2c9sc%24> 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<https://urldefensecom/v3/__https:/corporatefinanceinstitute.com/resources/kn...> 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<https://urldefense.com/v3/__https:/www.researchgate.net/publication/22829686...> 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. _______________________________________________ Gnso-newgtld-wg mailing list Gnso-newgtld-wg@icann.org<mailto:Gnso-newgtld-wg@icann.org> https://mm.icann.org/mailman/listinfo/gnso-newgtld-wg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy (https://www.icann.org/privacy/policy) and the website Terms of Service (https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on.
Thanks it does. However, I don’t see where the issues arising from the bid credits/multiplier have been addressed? The implementation guidance and auctions discussions have not yet addressed timing required for AS to prepare and secure funding, increased incentives on gaming and impacts to other non-AS applicants. How are we ensuring a fair process in the scenario below whereby applicants who were unable to partner up with a AS applicant are not put at a disadvantage? Cheers, Christa From: Jeff Neuman <jeff@jjnsolutions.com> Sent: July 9, 2020 12:16 PM To: christa@dottba.com; 'Kurt Pritz' <kurt@kjpritz.com>; 'Kathy Kleiman' <kathy@kathykleiman.com> Cc: gnso-newgtld-wg@icann.org Subject: RE: [Gnso-newgtld-wg] Vickey auctions Christa, We already discussed and I believe we agreed as a group to the following recommendations which will be out shortly as part of Package 7: Recommendation xx (rationale 9): If an applicant qualifies for Applicant Support and is part of a contention set that is resolved through an auction of last resort, a bid credit, multiplier, or other similar mechanism must apply to the bid submitted by that applicant. Implementation Guidance xx (rationale 9): Research should be conducted in the implementation phase to determine the exact nature and amount of the bid credit, multiplier, or other mechanism described in recommendation xx. Research should also be completed to determine a maximum value associated with the bid credit, multiplier, or other mechanism. Implementation Guidance xx (rationale 9): If the Applicant getting Applicant Support prevails in an auction, there should be restrictions placed on the Applicant from assigning the Registry Agreement, and/or from any Change of Control for a period of no less than three (3) years. This restriction seeks to prevent gaming of the Applicant Support Program whereby an applicant transfers its ownership of a registry to a third party in exchange for any form of financial gain. However, assignments that become necessary for the following reasons shall be permitted: * Assignments due to going out of business * Assignments due to death or retirement of a majority shareholder * Assignments due to EBERO * Assignments to affiliates or subsidiaries * Assignments required by competition authorities All assignments after such time shall be governed under the then-current Registry Agreement standard provisions; provided that any Assignment or Change of Control after the third year, but prior to the seventh (7th) year, shall require the applicant to repay the full amount of financial support received through the ASP Program plus an additional ten percent (10%). Hope that helps. Jeff Neuman JJN Solutions, LLC Founder & CEO +1.202.549.5079 Vienna, VA 22180 Jeff@JJNSolutions.com <mailto:Jeff@JJNSolutions.com> <http://jjnsolutions.com/> http://jjnsolutions.com From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org> > On Behalf Of christa@dottba.com <mailto:christa@dottba.com> Sent: Thursday, July 9, 2020 2:47 PM To: 'Kurt Pritz' <kurt@kjpritz.com <mailto:kurt@kjpritz.com> >; 'Kathy Kleiman' <kathy@kathykleiman.com <mailto:kathy@kathykleiman.com> > Cc: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Vickey auctions Hi All, Adding to Kurt, Kathy and Donna’s comments. I feel like we are putting the cart before the horse. I’m not sure how we can adequately discuss auctions until we iron out the auction bid credit/multiplier for Applicant Support applicants as: * Bid credits/multiplier provide incentives to Applicant Support applicants putting other applicants within that contention set at a disadvantage * Auction credits provide financial incentives and the potential of gaming * Potential bid credit maximums may affect bidding methodology * Change the dynamics of resolving a contention set via creative solutions/JVs * Impact all other applicants within that contention set * Sufficient time to prepare and secure additional funding for example, 30 days to submit a bid is unreasonable * Educational component on auction process, bidding strategy, values, funding, etc. One scenario, a contention set of six with one AS applicant, first person lucky enough to enter into a JV with the AS applicant is at an economic advantage and has the trump card to ensure the auction is through ICANN. Depending on your perspective, this may have a positive/negative outcome but we haven’t discussed these types of scenarios or considered the implications and potential safe guards. I’d suggest that we cover off bidding credit/multipliers beforehand so we can have comprehensive discussions in order to develop all-encompassing recommendations. If not, I think we’ll need to return to the auction discussion to address the deficiencies. Cheers, Christa From: Gnso-newgtld-wg <gnso-newgtld-wg-bounces@icann.org <mailto:gnso-newgtld-wg-bounces@icann.org> > On Behalf Of Kurt Pritz Sent: July 9, 2020 11:29 AM To: Kathy Kleiman <kathy@kathykleiman.com <mailto:kathy@kathykleiman.com> > Cc: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> Subject: Re: [Gnso-newgtld-wg] Vickey auctions Hi Kathy: A fine point: I believe a Vickrey auction is one where the parties don’t know the bids of the other parties bit can know their identities. Regardless of whether a Vickrey, top-price or ascending bid auction model is selected, my concern has to do with the timing of the sealed bid. I can think of nothing more discouraging to a newcomer, investor and potential contributor to the domain name industry than to say, “Pay the $185,000 application fee and, oh yeah, give us a sealed bid for how many millions you will bid in a sealed auction where the delegation might take place months or years from now.” Pile onto that the uncertainty of how the evaluation process will play out and additional costs that might be added, how many bidders there are, who they are, and the relative value of TLDs at some point in the future when the delegations are made. I don’t know of any other auctions that operate in this manner. In other instances, sealed bids are generally required just before the final award. Put another way, requiring the sealed bid at the time of application will greatly discourage new participants — especially smaller ones — from our industry. If we are seeking to encourage competition and choice, then the auction should take place close in time to the delegation — whether the auction is sealed bid - top price, sealed bid - Vickrey, or the clock model applied in the first round. A final point if I may, is that there has been a substantial amount of study done on the benefits and drawbacks to Vickrey auctions — and there have been examples of unintended detrimental results. The articles I read indicate that each instance includes a complex set of issues requiring advice of competent economists prior to selection of a Vickrey mechanism. The SubPro group might have had long discussions regarding this but I do not think they have been appropriately deep or informed by economics science. I do not have an issue as to whether a Vickrey or other form of auction is selected, but think there should be an appropriate study if we are to deviate from the past. Our high-level policy recommendation might be to select an auction model encouraging "individuals bid truthfully” and alert ICANN to consider Vickrey as an alternative to the current model and the need for study as part of the implementation. Maybe ICANN could get that study going now so that it could inform the implementation effort. Thanks this opportunity to speak up everyone. Kurt On Jul 9, 2020, at 10:12 AM, Kathy Kleiman <kathy@kathykleiman.com <mailto:kathy@kathykleiman.com> > wrote: 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" <Donna.Austin@team.neustar <mailto:Donna.Austin@team.neustar> > To: "Kathy Kleiman" <kathy@kathykleiman.com <mailto:kathy@kathykleiman.com> >, "gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@icann.org> " <gnso-newgtld-wg@icannorg> 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@icann.org] On Behalf Of Kathy Kleiman Sent: Monday, July 06, 2020 7:30 AM To: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@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://urldefense.com/v3/__https:/corporatefinanceinstitute.com/resources/k...> https://corporatefinanceinstitute.com/resources/knowledge/other/vickrey-auct... 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 <https://urldefensecom/v3/__https:/corporatefinanceinstitute.com/resources/kn...> asymmetric information 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 <https://urldefense.com/v3/__https:/www.researchgate.net/publication/22829686...> second-price mechanism 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. _______________________________________________ Gnso-newgtld-wg mailing list Gnso-newgtld-wg@icann.org <mailto:Gnso-newgtld-wg@icann.org> https://mm.icann.org/mailman/listinfo/gnso-newgtld-wg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy (https://www.icann.org/privacy/policy) and the website Terms of Service (https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on.
Kathy, There is an easy fix: All applicants who are in contention would be invited to submit their bid BEFORE there is any reveal of the string roster. That means that applicants without contention do not have to evaluate the value of their string. It would also help to NOT incentive portfolio applicants: the less information they have the better. Providing them with ANY information is AIDING them. Singular applicants in opposite couldn’t mostly care less for what other strings have been applied for (exceptions apply – e.g. .taxi and .cab applications: not in contention but in relation). We never agreed to make it more complicated for portfolio applicants (because we didn’t know how to achieve that) – but we CERTAINLY do not want to create incentives for them, or do we? Thanks, Alexander From: Gnso-newgtld-wg [mailto:gnso-newgtld-wg-bounces@icann.org] On Behalf Of Kathy Kleiman Sent: Donnerstag, 9. Juli 2020 20:12 To: gnso-newgtld-wg@icann.org Subject: Re: [Gnso-newgtld-wg] Vickey auctions 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" < <mailto:Donna.Austin@team.neustar> Donna.Austin@team.neustar> To: "Kathy Kleiman" < <mailto:kathy@kathykleiman.com> kathy@kathykleiman.com>, " <mailto:gnso-newgtld-wg@icann.org> gnso-newgtld-wg@icann.org" <gnso-newgtld-wg@icannorg> 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@icann.org] On Behalf Of Kathy Kleiman Sent: Monday, July 06, 2020 7:30 AM To: gnso-newgtld-wg@icann.org <mailto:gnso-newgtld-wg@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://urldefense.com/v3/__https:/corporatefinanceinstitute.com/resources/k...> https://corporatefinanceinstitute.com/resources/knowledge/other/vickrey-auct... 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 <https://urldefensecom/v3/__https:/corporatefinanceinstitute.com/resources/kn...> asymmetric information 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 <https://urldefense.com/v3/__https:/www.researchgate.net/publication/22829686...> second-price mechanism 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.
participants (6)
-
Alexander Schubert -
Austin, Donna -
christa＠dottba.com -
Jeff Neuman -
Kathy Kleiman -
Kurt Pritz