Putting Auction Theory to Work / Edition 1by Paul Milgrom
Pub. Date: 02/29/2004
Publisher: Cambridge University Press
In 1994, the United States adopted a new, theoretically-inspired auction design proposed by the author and his collaborator, Robert Wilson, for selling radio spectrum. After two small test auctions that together raised $1.1 billion, the design was used in what the New York Times called the greatest auction in history, which raised over $7 billion for the U.S.… See more details below
In 1994, the United States adopted a new, theoretically-inspired auction design proposed by the author and his collaborator, Robert Wilson, for selling radio spectrum. After two small test auctions that together raised $1.1 billion, the design was used in what the New York Times called the greatest auction in history, which raised over $7 billion for the U.S. government. The book tells the story of how economic theory influenced the auction design and shows how game theory can be used to offer practical, detailed advice to policy-makers and bidders in privatization auctions.
Table of ContentsSection 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.
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