MW24.5 - Lecture Quantitative Economics III - Master Program in Economics

There are many interesting topics in quantitative economics. In the past we did Bargaining theory, Information Economics, Bayesian Econometrics. This year we do Auction Theory.

Audience:

The lecture is targeted at advanced Master students.
Students should be familiar with Game Theory, Calculus and Probability.

Motivation:

Auctions belong to the oldest and perhaps most robust economic institutions. Today, auctions control the allocation of carbon emmissions, the provision and the distribution of green as well as not so green energy, transport services, communication licences, etc. Auctions help us to understand how prices for these and other goods are reached and how information is aggregated with the help of decentral institutions. Auctions have also been very well researched by experimental economists.

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.

Online teaching:

The module will be offered online. Lectures are provided as videos. Weekly homeworks are provided in Moodle. Exercises will start online.

• This is a course with a more technical topic. In such a context the online format offers benefits for learning that can't be obtained with traditional lecture room formats. Online videos allow students to follow their own learning speed. Students can pause their video, slow down or fast forward according to their individual preferences. Weekly online homeworks provide regular feedback and encourage students to actively engage with the material. Online discussions and exercises provide and enhance interaction.

  As a result, the online format seems to offer a much better learning experience and more room for students to interact. Students are clearly more successful than students with traditional teaching. With on-line teaching typically fewer than 5% of the students fail the exam. With traditional on-site teaching the number of failing students used to be much higher, typically around 25%.

Lecture + Exercises:

During the term you will in each week obtain a new set of videos. You can choose when (and how often) you watch these videos. These videos will remain available until the end of the term. I recommend to follow a routine: Watch the weekly videos on always the same day at always the same time.

Homework:

Each week you submit a brief homework (see the Moodle-page of the course). The homework counts for the final grade.

Discussion board:

Please use the discussion board in Moodle.

Online-Meeting:

Fridays, 10:15 (first meeting: 28.10.). You find a link to the Zoom room in Moodle. You should have already watched the videos and tried to solve the homework before you join the meeting.

Exam:

Mon., 6.3.2023, 14:30-15:30.
The final grade is 2/3 the result of a final exam and 1/3 the weekly homework. You can write the exam at home - provided you have a good connection to the internet. If you prefer to write at the FSU Jena and if you need a room, please let us know.

Prerequisites:

Game theory (e.g. as covered in BW24.2), Calculus, Probability.

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:

1. Introduction
2. Terminology and definitions
3. Equilibrium concepts
4. Symmetric private values
5. Revision: Random variables
6. Revision: Jointly distributed random variables
7. Order Statistics
8. Bidding equilibria in the first-price auction
9. Reserve prices
10. Entry fees
11. Revenue equivalence
12. Risk aversion
13. Interdependent values

Past exams

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