Auction Theory for PhDs, Fall 2009 [return to home page]

UPDATE (10/12/2009): Class will be held in LSRC A156, on Wednesdays 1:15PM -- 3:45PM. Map of Levine Science Research Center (LSRC) building.

I have three goals for this course.

help you gain a deeper understanding of some of the core ideas of auction theory (and mechanism design)
point you toward some areas of auction theory that are relatively unexplored
provide a solid theory foundation for those interested in empirical auction research

The class will hit the ground running. I expect that students in this class will have already seen some implementation theory and auction theory (e.g. in the graduate micro sequence), and I will move quickly through some challenging material at the beginning of the course.

A tentative syllabus is available. Highlights from the syllabus, including links to papers. [The list is heavy with my own papers, not because they are the best but because I know them well.]

Assignments.

Problem Set #1. Due at Class #2.

Problem Set #2. Due at Class #3.

Class #1.

Incentive-compatible mechanism design + Application: Bilateral Trade

Krishna, Chapter 5.

Lecture Note on Bilateral Trade

Lecture Note on Public Good Provision [UPDATE (10/12/2009): This file replaces one titled "Lecture Note on Groves Mechanisms"]

Lecture Note on Monopoly Pricing

Milgrom and Segal (2002), "Envelope Theorems for Arbitrary Choice Sets"

Lecture Supplement on the Envelope Theorem

Myerson Satterthwaite (1983), “Efficient Mechanisms for Bilateral Trading”

Class #2.

Revenue Equivalence Theorem (RET)

Lecture Note on Optimal Auctions

Bulow and Roberts (1989), “The Simple Economics of Optimal Auctions”

Milgrom, Chapter 3

Krishna, Chapters 3-4.

Risk-aversion.

Milgrom Chapter 4.3.

Krishna Chapter 4

Class #3.

Applications of RET

McAdams and Schwarz (2007), Who Pays When Auction Rules are Bent?

Bulow and Klemperer (1996), “Auctions Versus Negotiations”

Optimal auctions with common values.

See homework due this class.

Class #4.

Interdependence/affiliation.

Krishna Chapters 6-7

Milgrom and Weber (1982), A Theory of Auctions and Competitive Bidding

Krishna and Morgan (1997), An Analysis of the War of Attrition and the All-Pay Auction

Class #5.

Equilibrium uniqueness.

McAdams (2007), Uniqueness in Symmetric First-Price Auctions with Affiliation

Econometrics of pay-your-bid auctions

Guerre, Perrigne, and Vuong (2000), Optimal Nonparametric Estimation of First-price Auctions

McAdams (2008), Partial Identification and Testable Restrictions in Multi-Unit Auctions

Cantillon and Pesendorfer (2006), Combination Bidding in Multi-Unit Auction

Class # 6. In-class paper presentations.

The goal of this presentation is for you to dig into a research paper and its related literature. You should succinctly and clearly explain the main contributions of the paper and, if possible, provide your thoughts on possible directions for future work.

Here are some possible choices, to get you started. You need not choose one of these papers. However, you need to inform me of your choice and have a meeting with me to discuss your ideas prior to your presentation.

Position auctions

Varian (2007), Position auctions

Edelman, Ostrovsky, and Schwarz (2007), Internet Advertising and the Generalized Second-Price Auction: Selling Billions of Dollars Worth of Keywords

Athey and Ellison (2007), Position Auctions with Consumer Search

Milgrom (2008), Simplified Mechanisms with an Application to Sponsored-Search Auctions

TARP-style auctions

Klemperer, The Product-Mix Auction: a New Auction Design for Differentiated Goods

Matching mechanisms and Exchanges

Hatfield and Milgrom, Matching with Contracts

Milgrom, Assignment Messages and Exchanges

Entry

Bulow and Klemperer (2009), Why Do Sellers (Usually) Prefer Auctions?