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Regular version of the site

Recent Advances in Auction Theory

2020/2021
Academic Year
ENG
Instruction in English
3
ECTS credits
Course type:
Elective course
When:
3 year, 3 module

Instructor

Course Syllabus

Abstract

This course overviews the standard models of an auction. First, we will get familiar with the existing auction formats and learn when each of them is preferable. Second, we will study a classical auction for a single, indivisible object in detail, and establish the main results in mechanism design, such as the revelation principle, revenue equivalence, and the seller-optimal auction. Third, we will make the model more realistic and complement it with endogenous entry, information acquisition, and multiple objects to sell. Fourth, we will discuss the theory behind several empirical approaches used in auction studies. Finally, we will examine other auction-like mechanisms that characterize a wide range of real life interactions: contests, or all-pay auctions, where players compete for prizes by exerting effort, and a simple model of internet ad auctions. The course targets 3rd and 4th year BA students who already know the key principles of economic thinking, are familiar with the core disciplines, such as Microeconomics and Game Theory, and have the skills to solve theoretical models. The class consists of lectures (30 academic hours in total) and seminars (6 academic hours in total). The main activities include (1) lectures, (2) students’ presentations, (3) written home assignments, and (4) a final test. The discipline is instructed in English.
Learning Objectives

Learning Objectives

  • Learn how to formulate and solve simple auction models
  • Understand how simple auction models can be estimated
  • Apply the key principles of mechanism design in own theoretical research
Expected Learning Outcomes

Expected Learning Outcomes

  • Read, understand, and critically assess research and policy papers on auctions and mechanism design
  • Model a strategic interaction in a competitive environment and use the tools of mechanism design to solve the problem of interest
  • Construct a mapping between theoretical auction models and data
  • Develop own research ideas related to auctions and mechanisms
Course Contents

Course Contents

  • Introduction: Auction Formats
    Introduction: Auction Formats
  • Introduction: Game of Complete and Incomplete Information
    A Simple Auction Model in These Two Information Environments
  • Solving a Simple Auction Model: First Price vs Second Price Auctions
    Solving a Simple Auction Model: First Price vs Second Price Auctions
  • Introduction to Mechanism Design
    The Revelation Principle, Dominant Strategy vs Bayesian Implementation, Application to Auctions
  • Extending the Basic Auction Model
    Correlated Types, Common Values, Entry Decisions, and Multiple Units to Sell
  • Bringing Auction Theory to Data
    Some Basic Identification Results
  • All-Pay Auctions
    Noisy Output vs Unobservable Effort and Tullock-Type Contests, Equilibria in All-Pay Auctions under Complete and Incomplete Information,Design Issues in All-Pay Auctions (The Optimal Prize Allocation, Information Disclosure etc.)
  • Some Applications of Auction Theory
    Internet Ad Auctions and Spectrum Auctions
  • Presenting a Pre-Selected Paper and Preparing a Referee Report on It
Assessment Elements

Assessment Elements

  • non-blocking Home Assignment 1
  • non-blocking Home Assignment 2
  • non-blocking Presenting a Pre-Selected Paper
  • non-blocking Writing a Referee Report on a Pre-Selected Paper
  • non-blocking Final test
Interim Assessment

Interim Assessment

  • Interim assessment (3 module)
    0.4 * Final test + 0.15 * Home Assignment 1 + 0.15 * Home Assignment 2 + 0.15 * Presenting a Pre-Selected Paper + 0.15 * Writing a Referee Report on a Pre-Selected Paper
Bibliography

Bibliography

Recommended Core Bibliography

  • Auction theory, Krishna V., 2010
  • Intermediate microeconomics : a modern approach, Varian H. R., 2014

Recommended Additional Bibliography

  • An introduction to auction theory, Menezes F. M., Monteiro P. K., 2008