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Auction Theory: A Guide to the Literature
 JOURNAL OF ECONOMIC SURVEYS
, 1999
"... This paper provides an elementary, nontechnical, survey of auction theory, by introducing and describing some of the critical papers in the subject. (The most important of these are reproduced in a companion book, The Economic Theory of Auctions, Paul Klemperer (ed.), Edward Elgar (pub.), forthco ..."
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Cited by 349 (2 self)
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This paper provides an elementary, nontechnical, survey of auction theory, by introducing and describing some of the critical papers in the subject. (The most important of these are reproduced in a companion book, The Economic Theory of Auctions, Paul Klemperer (ed.), Edward Elgar (pub.), forthcoming.) We begin with the most fundamental concepts, and then introduce the basic analysis of optimal auctions, the revenue equivalence theorem, and marginal revenues. Subsequent sections address riskaversion, affiliation, asymmetries, entry, collusion, multiunit auctions, double auctions, royalties, incentive contracts, and other topics. Appendices contain technical details, some simple worked examples, and a bibliography for each section.
Concurrent Auctions across the Supply Chain
, 2001
"... In this paper we design protocols for exchange of information between a sequence of markets along a single supply chain. These protocols allow each of these markets to function separately, while the information exchanged guarantees efficient global behavior across the supply chain. Each market form ..."
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Cited by 31 (1 self)
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In this paper we design protocols for exchange of information between a sequence of markets along a single supply chain. These protocols allow each of these markets to function separately, while the information exchanged guarantees efficient global behavior across the supply chain. Each market form a link in the supply chain operates as a double auction, where the bids on one side of the double auction come from bidders in the corresponding segment of the industry, and the bids on the other side are synthetically generated by the protocol to express the combined information from all other links in the chain. The double auctions in each of the markets can be of several types, and we study several variants of incentive compatible double auctions, comparing them in terms of their efficiency and of the market revenue.
Incentives and stability in large twosided matching markets
 American Economic Review
"... A number of labor markets and student placement systems can be modeled as manytoone matching markets. We analyze the scope for manipulation in manytoone matching markets under the studentoptimal stable mechanism when the number of participants is large. Under some regularity conditions, we show ..."
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Cited by 20 (1 self)
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A number of labor markets and student placement systems can be modeled as manytoone matching markets. We analyze the scope for manipulation in manytoone matching markets under the studentoptimal stable mechanism when the number of participants is large. Under some regularity conditions, we show that the fraction of participants that have incentives to misrepresent their preferences when others are truthful approaches zero as the market becomes large. With an additional technical condition, truthful reporting by every participant is an approximate equilibrium under the studentoptimal stable mechanism in large markets. The results help explain the success of the studentoptimal stable mechanism in large matching markets observed in practice.
Internet auctions with many traders
, 2001
"... We study a multiunit auction environment similar to eBay. Sellers, each with a single unit of a homogenous good, set reserve prices at their own independent secondprice auctions. Each buyer has a private value for the good and wishes to acquire a single unit. Buyers can bid as often as they like a ..."
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Cited by 18 (0 self)
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We study a multiunit auction environment similar to eBay. Sellers, each with a single unit of a homogenous good, set reserve prices at their own independent secondprice auctions. Each buyer has a private value for the good and wishes to acquire a single unit. Buyers can bid as often as they like and move between the sellers ’ auctions in a dynamic environment. We characterize a perfect Bayesian equilibrium for this decentralized trading mechanism in which, conditional on reserve prices, an efficient set of trades occurs at a uniform trading price. When the number of buyers and sellers is large but finite, the sellers set reserve prices equal to their true costs under a very mild distributional assumption, so expost efficiency is achieved. The buyers ’ strategies in this equilibrium are very simple and do not depend on their beliefs about the other buyers ’ valuations, or the number of buyers and sellers. They bid almost myopically. Their only ‘sophisticated ’ choice is where to bid when they are indifferent between several sellers.
Asymptotically Optimal MultiObject Auctions
"... Auctions are a basic tool for resource allocation in noncooperative environments. Much work in computer science, and in artificial intelligence in particular, has been concerned with algorithms for winner determination in auctions in order to maximize a designer's revenue. ..."
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Cited by 16 (2 self)
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Auctions are a basic tool for resource allocation in noncooperative environments. Much work in computer science, and in artificial intelligence in particular, has been concerned with algorithms for winner determination in auctions in order to maximize a designer's revenue.
Bargaining with Incomplete Information
 ROBERT J. AUMANN AND SERGIU HART, EDS., HANDBOOK OF GAME THEORY, VOL. 3, AMSTERDAM: ELSEVIER SCIENCE B.V., CHAPTER 50
, 2002
"... A central question in economics is understanding the difficulties that parties have in reaching mutually beneficial agreements. Informational differences provide an appealing explanation for bargaining inefficiencies. This chapter provides an overview of the theoretical and empirical literature on b ..."
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Cited by 16 (0 self)
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A central question in economics is understanding the difficulties that parties have in reaching mutually beneficial agreements. Informational differences provide an appealing explanation for bargaining inefficiencies. This chapter provides an overview of the theoretical and empirical literature on bargaining with incomplete information. The chapter begins with an analysis of bargaining within a mechanism design framework. A modern development is provided of the classic result that, given two parties with independent private valuations, ex post efficiency is attainable if and only if it is common knowledge that gains from trade exist. The classic problems of efficient trade with onesided incomplete information but interdependent valuations, and of efficiently dissolving a partnership with twosided incomplete information, are also reviewed using mechanism design. The chapter then proceeds to study bargaining where the parties sequentially exchange offers. Under onesided incomplete information, it considers sequentia l bargaining between a seller with a known valuation and a buyer with a private valuation. When there is a "gap" between the seller's valuation and the support of buyer valuations, the selleroffer game has essentially a unique sequential equilibrium. This equilibrium exhibits the following properties: it is stationary, trade occurs in finite time, and the price is favorable to the informed party (the Coase Conjecture). The alternatingoffer game exhibits similar properties, when a refinement of sequential equilibrium is applied. However, in the case of "no gap" between the seller's valuation and the support of buyer valuations, the bargaining does not conclude with probability one after any finite number of periods, and it does not follow that sequential e...
Almostdominant Strategy Implementation
 GAMES AND ECONOMIC BEHAVIOR
, 1999
"... Though some economic environments provide allocation rules that are implementable in dominant strategies (strategyproof), a significant number of environments yield impossibility results. On the other hand, while there are quite general possibility results regarding implementation in Nash or Bayesi ..."
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Cited by 14 (1 self)
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Though some economic environments provide allocation rules that are implementable in dominant strategies (strategyproof), a significant number of environments yield impossibility results. On the other hand, while there are quite general possibility results regarding implementation in Nash or Bayesian equilibrium, these equilibrium concepts make strong assumptions about the knowledge that players possess, or about the way they deal with uncertainty. As a compromise between these two notions, we propose a solution concept built on one premise: Players who do not have much to gain by manipulating an allocation rule will not bother to manipulate it. We search for efficient allocation rules for 2agent exchange economies that never provide players with large gains from cheating. Though we show that such rules are very inequitable, we also show that some such rules are significantly more flexible than those that satisfy the stronger condition of strategyproofness.
Matching with couples: Stability and incentives in large markets
, 2010
"... Accommodating couples has been a longstanding issue in the design of centralized labor market clearinghouses for doctors and psychologists, because couples view pairs of jobs as complements. A stable matching may not exist when couples are present. We find conditions under which a stable matching ex ..."
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Cited by 13 (5 self)
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Accommodating couples has been a longstanding issue in the design of centralized labor market clearinghouses for doctors and psychologists, because couples view pairs of jobs as complements. A stable matching may not exist when couples are present. We find conditions under which a stable matching exists with high probability in large markets. We present a mechanism that finds a stable matching with high probability, and which makes truthtelling by all participants an approximate equilibrium. We relate these theoretical results to the job market for psychologists, in which stable matchings exist for all years of the data, despite the presence of couples.
Approximately Optimal Mechanism Design via Differential Privacy ∗
, 1004
"... In this paper we study the implementation challenge in an abstract interdependent values model and an arbitrary objective function. We design a mechanism that allows for approximate optimal implementation of insensitive objective functions in expost Nash equilibrium. If, furthermore, values are pri ..."
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Cited by 13 (1 self)
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In this paper we study the implementation challenge in an abstract interdependent values model and an arbitrary objective function. We design a mechanism that allows for approximate optimal implementation of insensitive objective functions in expost Nash equilibrium. If, furthermore, values are private then the same mechanism is strategy proof. We cast our results onto two specific models: pricing and facility location. The mechanism we design is optimal up to an additive factor of the order of magnitude of one over the square root of the number of agents and involves no utility transfers. Underlying our mechanism is a lottery between two auxiliary mechanisms — with high probability we actuate a mechanism that reduces players influence on the choice of the social alternative, while choosing the optimal outcome with high probability. This is where the recent notion of differential privacy is employed. With the complementary probability we actuate a mechanism that is typically far from optimal but is incentive compatible. The joint mechanism inherits the desired properties from both. We thank Amos Fiat and Haim Kaplan for discussions at an early stage of this research. We thank Frank McSherry and Kunal Talwar for helping to clarify issues related to the constructions in [22]. Finally, we thank Jason Hartline,