A Primer on Auction Design, Management, and Strategy. David J. Salant / The MIT Press Cambridge, Massachusetts London, England

Transcription

1 A Primer on Auction Design, Management, and Strategy David J. Salant / The MIT Press Cambridge, Massachusetts London, England

2 Contents Preface xi 1 Introduction Goals of This Primer What Are Auctions? Why Auctions? Types of Auctions A New Age of Auctions New Types of Auctions Auctions Replacing Regulation Auctions in the Private Sector Why Auction Design (and Management) Matters Outline of This Primer 15 2 Game Theory, Auction Design, and Strategy Game Theory and Auctions Noncooperative Games One-Shot Auctions Normal Form Games Equilibrium in Normal Form Games Mixed Strategy Equilibrium in Spectrum Auctions: Some Examples Equilibrium in Multi-Attribute Auctions Multi-Stage and Sequential Auctions Subgame Perfect Equilibrium Signaling Games 24

3 vi Contents 2.4 Repeated Games Finitely Repeated Games Infinitely Repeated Games Overlapping Generations of Players Summary 28 3 Revenue Equivalence Four Basic Auction Types for Single-Object Auctions Auction Strategy in the Four Basic Auction Types Strategie Equivalence Revenue Equivalence of English and Dutch Auctions Summary 37 4 Optimal and VCG Auctions Optimal Auctions Calculating Optimal Bid Functions Optimal Auctions The Revelation Principle The Revelation Principle and Optimal Auctions Incentive-Compatible Auctions The Vickrey-Clark-Groves Mechanism Properties of VCG Auctions Multi-Object VCG Auctions VCG-like Mechanisms for Advertising Auctions Summary 53 5 Imperfect Information and the Winner's Curse Common Values and Order Statistics Bidding Strategy in Common-Value Auctions Bid Strategy in Dutch and First-Price Auctions Bid Strategy in a Second-Price Auction Bid Strategy in English Auctions Comparisons of English, Second-Price, and Dutch Common-Value Auction Outcomes 60

4 Contents vii 5.3 Almost Common-Value Auctions and Informational Asymmetries Auctions with One Informed Bidder Auctions with Both Informed and Uninformed Bidders Other Asymmetries Summary 64 6 Sequential Auctions of Substitutes Multi-Lot Auctions The Declining-Price Anomaly Weber's Martingale Theorem Strategie Allocation Decisions A Simple Two-Auction Example Optimizing the Distribution of Auction Target Volume across Auctions Sequential Auctions and Risk Auction Timing A Summary of Auction Timing Considerations 82 7 Sequential Auctions of Complements Examples of Complementarities Renewal Auctions Sequential Auctions of Complements Sequential Intellectual Property Rights Auctions Auctions for Complementary Inputs with Imperfect Competition in Downstream Markets Summary 96 8 Single-Product Auctions Introduction Simultaneous versus Sequential Auctions Clock Auctions Clock Auctions and Sealed-Bid Auctions Clock Auctions, Sealed-Bid Auctions, and Market Power Supply-Function Auctions Conclusions and Applications 108

5 viii Contents 9 Simultaneous Auctions The SMR Auction III 9.2 Introduction to the SMR Auction A Brief History of the SMR and Clock Auctions SMR Auction and Its Variants SMR Auction Properties Straightforward Bidding in SMR Auctions Strategie Withholding in SMR Auctions SMR Auction Experience SMR Auction Configuration The Texas Capacity Auctions The Spanish 4G Auction (2011) The Mexican PCS Auction US FCC Auction 66 Advanced Wireless Services Arbitrage in SMR Auctions Conclusion Combinatorial auctions Introduction Hierarchical Package Bidding VCG Auction Properties Revenues in VCG Auctions Faimess in VCG Auctions Budgets in VCG Auctions Core-Selecting Auctions Ascending Package Auctions and the Combinatorial Clock Auction Complexity Bidder incentives Comparing the Performance of the CCA and Other Auctions The Austrian CCA Conclusion Final Remarks Introduction Game Theory and Bidder Incentives Bidder Incentives and Revenue Equivalence 158

6 Contents 11.4 Single-Object versus Multi-Object Auctions 11.5 Sequential Auctions Bidding Behavior Optimal Auctions Auction Design, Management, and Strategy 11.9 Participation Auctions and Markets 162 Notes 163 References 173 Index 179