Putting Auction Theory to Work (Churchill Lectures in Economics)
Cambridge University Press
Edition: Illustrated, 1/12/2004
EAN 9780521551847, ISBN10: 0521551846
Hardcover, 394 pages, 23.2 x 16.7 x 2.8 cm
Language: English
Originally published in English
This book provides a comprehensive introduction to modern auction theory and its important new applications. It is written by a leading economic theorist whose suggestions guided the creation of the new spectrum auction designs. Aimed at graduate students and professionals in economics, the book gives the most up-to-date treatments of both traditional theories of 'optimal auctions' and newer theories of multi-unit auctions and package auctions, and shows by example how these theories are used. The analysis explores the limitations of prominent older designs, such as the Vickrey auction design, and evaluates the practical responses to those limitations. It explores the tension between the traditional theory of auctions with a fixed set of bidders, in which the seller seeks to squeeze as much revenue as possible from the fixed set, and the theory of auctions with endogenous entry, in which bidder profits must be respected to encourage participation.
Section 1. Getting to Work
1. Politics sets the stage
2. Designing for multiple goals
3. Comparing seller revenues
4. The academic critics
5. Plan for this book
Part I. The Mechanism Design Approach
Section 2. Vickrey–Clarke–Groves Mechanisms
6. Formulation
7. Always optimal and weakly dominant strategies
8. Balancing the budget
9. Uniqueness
10. Disadvantages of the Vickrey auction
11. Conclusion
Section 3. The Envelope Theorem and Payoff Equivalence
12. Hottelling's lemma
13. The envelope theorem in integral form
14. Quasi-linear payoffs
15. Conclusion
Section 4. Bidding Equilibrium and Revenue Differences
16. The single crossing conditions
17. Deriving and verifying equilibrium strategies
18. Revenue comparisons in the benchmark model
19. Expected-revenue maximizing auctions
20. Conclusion
Section 5. Interdependence of Types and Values
21. Which models and assumptions are 'useful'?
22. Statistical dependence and revenue-maximizing auctions
23. Wilson's drainage tract model
24. Correlated types model interdependent values
25. Conclusion
Section 6. Auctions in Context
26. The profit and surplus contribution of an entrant
27. Symmetric models with costly entry
28. Asymmetric models
devices to promote competition
29. After the bidding ends
30. Conclusion
Part II. Multi-Unit Auctions
Section 7. Uniform Price Auctions
31. Uniform price sealed bid auctions
32. Simultaneous ascending auctions
33. Conclusion
Section 8. Package Auctions and Combinatorial Bidding
34. Vickrey auctions and the monotonicity problems
35. Bernheim–Whinston first-price package auctions
36. Ausubel–Milgrom ascending proxy auctions
37. Conclusion.
'Paul Milgrom has combined fundamental work in economic theory and, in particular, the theory of auctions, with extensive practical participation in the auctions of the electromagnetic spectrum. This book is a brilliant synthesis of his own and others' contributions to the field. The impact of practical problems on the need for theory is thoroughly exemplified. The exposition of the theory has that complete ease only achievable through complete mastery and intense work.' Kenneth Arrow, Nobel Laureate, Stanford University