#### Auction Theory (Summer 2019)

- Lecture:
- Tue., 10:15-11:45, Carl Zeiss Str. 3, SR 274
- Exercises:
- Thu., 14:15-15:45, Carl Zeiss Str. 3, SR 129
- Exam
- 26.7.2019. . Questions and answers, without any guarantee

- This lecture will be given in English.
- Audience: The lecture is targeted at advanced Master students.

Students should be familiar with Game Theory, Probability and Statistics. - 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:
- Krishna, Vijay, 2002. Auction Theory, Academic Press (this is the main text for this course).
- 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.
- 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

- Outline:
- Introduction
- Mechanisms in general
- History
- Auctions today
- Valuations
- Equivalence among auctions
- Aims when choosing an auction format

- Symmetric private values
- Second price auctions
- Digression: Some game theory
- First price auctions

- Digression: Random variables
- Random variables
- Hazard Rates
- Joint distributions
- Dominance
- Order statistics

- First price auctions (bids, revenue, and risk)
- Reserve prices
- Revenue equivalence
- Using the revenue equivalence principle
- Risk aversion
- Interdependent values

- Introduction
- Past exams
- Please send feedback and questions to oliver.kirchkamp@uni-jena.de.