Putting Auction Theory to Work

  title={Putting Auction Theory to Work},
  author={Paul R. Milgrom},
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… 

Figures and Tables from this paper

Auctions: Advances in Theory and Practice

Auctions and competitive bidding institutions are important both for empirical and theoretical reasons. The aim of this chapter is to examine the use of auctions, paying equal attention to theory and

An Introduction to Auction Theory for Undergraduate Students

This paper provides a non-technical introduction to auction theory. Despite the rapidly expanding literature using auction theory, and the few textbooks introducing it to upper-level Ph.D. students,

Essays on auctions

The past few decades have witnessed a remarkable expansion of auctions activities. From the sales of mobile-phone licenses and industrial goods, to the privatization of formerly state-owned

Matching, Auctions, and Market Design

I provide a brief introduction to the early literatures on Matching, Auctions, and Market Design.The design of matching markets and auctions has brought economic theory and practice together. Indeed,

A Systematic Presentation of Equilibrium Bidding Strategies to Undergraduate Students

ABSTRACTThis paper provides a non-technical introduction to auction theory. Despite the rapidly expanding literature using auction theory, and the few textbooks introducing it to upper-level Ph.D.

Optimal bidding in auctions from a game theory perspective

2 Motivating insights from auction theory and practice 2 . 1

I study the design of auctions of natural resources, such as oil or mineral rights. A good auction design promotes both an efficient assignment of rights and competitive revenues for the seller. The

On the Pricing Rule in Electronic Auctions

The unique symmetric equilibrium bid function is derived, showing that the presence of bid increments can significantly alter bidder behavior and result in a highly non-linear bid function, in contrast to that predicted under either the English or the Vickrey formats.

Auctions as Coordination Devices

This paper develops an economic argument relating auctions to high market prices. At the core of the argument is the claim that market competition and bidding in an auction should be analyzed as part

Auction Theory




Auctions with endogenous quantity

This article studies auctions in which several sellers compete for the right to sell to a market characterized by a negatively sloped demand curve. In this environment the quantity traded becomes

Putting Auction Theory to Work: The Simultaneous Ascending Auction

I review the uses of economic theory in the initial design and later improvement of the “simultaneous ascending auction,” which was developed initially for the sale of radio spectrum licenses in the

Putting Auction Theory to Work: Ascending Auctions with Package Bidding

Ascending auctions with package bidding and their economic uses are explained and the main results of recent FCC-sponsored experiments with such auctions are summarized. A benchmark model is

Design competition through multidimensional auctions

This article studies design competition in government procurements by developing a model of two-dimensional auctions, where firms bid on both price and quality, and bids are evaluated by a scoring

Menu Auctions, Resource Allocation, and Economic Influence

In many examples of competitive bidding (e.g., government construction contracting) the relevant object is either partially divisible or ill-defined, in contrast to much of the recent theoretical

What Really Matters in Auction Design

The most important issues in auction design are the traditional concerns of competition policy - preventing collusive, predatory, and entry-deterring behaviour. Ascending and uniform-price auctions

Accounting for Cognitive Costs in On-Line Auction Design

This work compares the usefulness of different mechanisms for on-line auctions, focusing on the cognitive costs placed on users, the possibilities for agent mediation, and the trust properties of the auction.

Ascending Auctions with Package Bidding

Abstract A family of ascending package auction models is introduced in which bidders may determine their own packages on which to bid. In the proxy auction (revelation game) versions, the outcome is

Standard Auctions with Financially Constrained Bidders

We develop a methodology for analyzing the revenue and efficiency performance of auctions when buyers have private information about their willingness to pay and ability to pay. We then apply the


This paper proposes a convenient estimation method for the empirical study of auction models. The authors focus on first-price sealed-bid and descending auctions within the private value paradigm.