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116
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.
An efficient dynamic auction for heterogeneous commodities
 The American Economic Review
, 2006
"... This article proposes a new dynamic design for auctioning multiple heterogeneous commodities. An auctioneer wishes to allocate K types of commodities among n bidders. The auctioneer announces a vector of current prices, bidders report quantities demanded at these prices, and the auctioneer adjusts t ..."
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Cited by 78 (8 self)
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This article proposes a new dynamic design for auctioning multiple heterogeneous commodities. An auctioneer wishes to allocate K types of commodities among n bidders. The auctioneer announces a vector of current prices, bidders report quantities demanded at these prices, and the auctioneer adjusts the prices. Units are credited to bidders at the current prices as their opponents ’ demands decline, and the process continues until every commodity market clears. Bidders, rather than being assumed to behave as pricetakers, are permitted to strategically exercise their market power. Nevertheless, the proposed auction yields Walrasian equilibrium prices and, as from a VickreyClarkeGroves mechanism, an efficient allocation. (JEL D44) In earlier work (Ausubel, 1997, 2004), I proposed an efficient ascending auction design for multiple homogeneous items. In environments where bidders have pure private values and diminishing marginal values, this dynamic auction yields outcomes coinciding with that of the (sealedbid) Vickrey auction (William Vickrey, 1961), but offers advantages of simplicity, transparency, and privacy preservation. Moreover, in some environments where bidders have interdependent values for the items, this dynamic auction continues to yield efficient outcomes and thus outperforms even the Vickrey auction. However, situations abound in diverse industries in which heterogeneous (but related) commodities are auctioned. On a typical Monday,
Eliciting Informative Feedback: The PeerPrediction Method
 Management Science
, 2005
"... informs ® doi 10.1287/mnsc.1050.0379 ..."
Robust mechanism design
 ECONOMETRICA
, 2005
"... The mechanism design literature assumes too much common knowledge of the environment among the players and planner. We relax this assumption by studying implementation on richer type spaces, with more higher order uncertainty. We study the "ex post equivalence" question: when is interim implementati ..."
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Cited by 55 (6 self)
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The mechanism design literature assumes too much common knowledge of the environment among the players and planner. We relax this assumption by studying implementation on richer type spaces, with more higher order uncertainty. We study the "ex post equivalence" question: when is interim implementation on all possible type spaces equivalent to requiring ex post implementation on the space of payoff types? We show that ex post equivalence holds when the social choice correspondence is a function and in simple quasilinear environments. When ex post equivalence holds, we identify how large the type space must be to obtain the equivalence. We also show that ex post equivalence fails in general, including in quasilinear environments with budget balance. For quasilinear environments, we provide an exact characterization of when interim implementation is possible in rich type spaces. In this environment, the planner can fully extract players’ belief types, so the incentive constraints reduce to conditions distinguishing types with the same beliefs about others’ types but different payoff types.
Optimal Pricing Mechanisms with Unknown Demand
 American Economic Review
, 2003
"... The standard profitmaximizing multiunit auction intersects the submitted demand curve with a preset reservation supply curve, which is determined using the distribution from which the buyers ’ valuations are drawn. However, when this distribution is unknown, a preset supply curve cannot maximize ..."
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Cited by 48 (0 self)
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The standard profitmaximizing multiunit auction intersects the submitted demand curve with a preset reservation supply curve, which is determined using the distribution from which the buyers ’ valuations are drawn. However, when this distribution is unknown, a preset supply curve cannot maximize monopoly profits. The optimal pricing mechanism in this situation sets a price to each buyer on the basis of the demand distribution inferred statistically from other buyers ’ bids. The resulting profit converges to the optimal monopoly profit with known demand as the numberofbuyersgoestoinfinity, and convergence can be substantially faster than with sequential price experimentation. * Department of Economics, Stanford University, Stanford
Mechanism Design with Interdependent Valuations
 E¢ ciency,” Econometrica
, 2004
"... Agents ’ valuations are interdependent if they depend on the signals, or types, of all agents. Under the implicit assumption that agents cannot observe their outcomedecision payoffs, previous literature has shown that with interdependent valuations and independent signals efficient design is imposs ..."
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Cited by 36 (4 self)
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Agents ’ valuations are interdependent if they depend on the signals, or types, of all agents. Under the implicit assumption that agents cannot observe their outcomedecision payoffs, previous literature has shown that with interdependent valuations and independent signals efficient design is impossible. This paper shows that an efficient mechanism exists in an environment where first the final outcome (e.g., allocation of the goods) is determined, then the agents observe their own outcomedecision payoffs, and then final transfers are made.
2000): “Information Acquisition and Efficient Mechanism Design,” Cowles Foundation Discussion Paper No
"... We consider a general mechanism design setting where each agent can acquire (covert) information before participating in the mechanism. The central question is whether a mechanism exists that provides the efficient incentives for information acquisition exante and implements the efficient allocatio ..."
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Cited by 34 (6 self)
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We consider a general mechanism design setting where each agent can acquire (covert) information before participating in the mechanism. The central question is whether a mechanism exists that provides the efficient incentives for information acquisition exante and implements the efficient allocation conditional on the private information expost. It is shown that in every private value environment the VickreyClarkGroves mechanism guarantees both exante as well as expost efficiency. In contrast, with common values, exante and expost efficiency cannot be reconciled in general. Sufficient conditions in terms of sub and supermodularity are provided when (all) expost efficient mechanisms lead to private under or overacquisition of information.
Robust game theory
, 2006
"... We present a distributionfree model of incompleteinformation games, both with and without private information, in which the players use a robust optimization approach to contend with payoff uncertainty. Our “robust game” model relaxes the assumptions of Harsanyi’s Bayesian game model, and provides ..."
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Cited by 33 (0 self)
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We present a distributionfree model of incompleteinformation games, both with and without private information, in which the players use a robust optimization approach to contend with payoff uncertainty. Our “robust game” model relaxes the assumptions of Harsanyi’s Bayesian game model, and provides an alternative distributionfree equilibrium concept, which we call “robustoptimization equilibrium, ” to that of the ex post equilibrium. We prove that the robustoptimization equilibria of an incompleteinformation game subsume the ex post equilibria of the game and are, unlike the latter, guaranteed to exist when the game is finite and has bounded payoff uncertainty set. For arbitrary robust finite games with bounded polyhedral payoff uncertainty sets, we show that we can compute a robustoptimization equilibrium by methods analogous to those for identifying a Nash equilibrium of a finite game with complete information. In addition, we present computational results.
Minimum payments that reward honest reputation feedback
 IN PROCEEDINGS OF THE ACM CONFERENCE ON ELECTRONIC COMMERCE, ANN ARBOR
, 2006
"... Online reputation mechanisms need honest feedback to function effectively. Self interested agents report the truth only when explicit rewards offset the cost of reporting and the potential gains that can be obtained from lying. Sidepayment schemes (monetary rewards for submitted feedback) can make ..."
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Cited by 31 (9 self)
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Online reputation mechanisms need honest feedback to function effectively. Self interested agents report the truth only when explicit rewards offset the cost of reporting and the potential gains that can be obtained from lying. Sidepayment schemes (monetary rewards for submitted feedback) can make truthtelling rational based on the correlation between the reports of different buyers. In this paper we use the idea of automated mechanism design to construct the payments that minimize the budget required by an incentivecompatible reputation mechanism. Such payment schemes are defined by a linear optimization problem that can be solved efficiently in realistic settings. Furthermore, we investigate two directions for further lowering the cost of incentivecompatibility: using several reference reports to construct the sidepayments, and filtering out reports that are probably false.