Lecture Auction Theory (Summer 2011)

• This lecture will be given in English.
• Some knowledge of game theory and some basic knowledge of probabilities may help.
• Audience: The lecture is primarily targeted at graduate students. Advanced students from the Hauptstudium are welcome.
• Motivation:
  Auctions belong to the oldest and perhaps most robust economic institutions. Auctions help us to understand how prices are reached and how information is aggregated with the help of decentral institutions.
• Topics: Standard types of auctions, efficiency and revenue in the case of private values, risk aversion, experimental evidence, auctions with interdependent valuations, winner's curse, common values, experimental evidence, affiliated values, uncertainty over the number of bidders, multiple units, combinatorial auctions.
• Literature:
  • Cassidy R., 1967. Auctions and Auctioneering, Berkeley: University of California press.
  • Kagel, J. H., 1995. Auctions: A Survey of Experimental Research, in The Handbook of Experimental Economics, J. H. Kagel and A. E. Roth (eds). Princeton: Princeton University Press.
  • Kagel, J. H. and D. Levin, 2002. Bidding in Common Value Auctions: A Survey of Experimental Research, in Common-Value Auctions and the Winner's Curse, Princeton University Press.
  • Vijay Krishna, 2002. Auction Theory, Academic Press.
  • Klemperer P., (Ed.), 2000. The Economic Theory of Auctions, Edward Elgar Publishing.
  • Klemperer, P., 1999. Auction Theory: A guide to the Literature, Journal of Economic Surveys, 13: 227-260. CEPR
  • Klemperer, P., 2000. Why every economist should learn some auction theory. invited paper from the Econometric Society World Congress. CEPR
  • McAfee, R.P., and J. McMillan, 1987. "Auctions and Bidding," Journal of Economic Literature, 25:699-738. Jstor
  • Wilson, R., 1992. "Strategic Analysis of Auctions," in R.J. Aumann and S. Hart, Handbook of Game Theory with Economic Applications, Vol. 1. Amsterdam: Elsevier Science Publishers.Paper
• Schedule:
  • 1. week: Introduction
  • 2. week: The symmetric private valuation case, 2nd price auctions, equilibria in dominant strategies, 1st price auctions
  • 3. week: 1st price auctions (cont.), distributions
  • 4. week: stochastic dominance
  • 5. week: order statistics
  • 6. week: properties of 1st price auctions
  • 7. week: reserve prices
  • 8. week: reserve prices (cont.), revenue equivalence principle
  • 9. week: revenue equivalence principle (proof), examples
  • 10. week: risk aversion
  • 11. week: interdependent values
  • 12. week: interdependent values (cont.)
• Past exams
• Please send feedback and questions to lehre@kirchkamp.de.