-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=
SYLLABUS
Generally, classes will include at least some of these components:
1) an experiment, or discussion of a previous experiment, or both;
a round in a tournament
2) discussion of problem sets and programming assignments
3) discussion of practical matters, including data-gathering and
experimentation on eBay, your case histories from eBay, news items
4) discussion of published empirical work, including both field and
laboratory experiments
5) development of mathematical theory
-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=
Week 1 HOMEWORK: chapter 1 of S3 (Snipers, Shills, & Sharks)
Vickrey 1961 (paper #1)
assignment 1, DUE Feb 15, in class
1 Tue Feb 6
o Introduction and outline, course goals, methodologies,
common auction forms
1 Thu Feb 8
o History of auctions, starting with Herodotus, c. 500 B.C.
o The English auction: Cassady on executing the bid
o The Japanese Button auction, Dominant strategies,
variants of the English: Ascending price and outcry forms
o Book bids, anticipating eBay.
--------------------------------------------------------------------------------
Week 2 HOMEWORK: chapter 2 of S3
assignment 2, DUE March 1
2 Tue Feb 13
o Mail-bid sales, sealed-bid second-price (Vickrey) auctions
o Buy-or-Bid sales (cf Buy-It-Now on eBay)
o (Weak) strategic equivalence, English vs. second-price
o Sealed-bid first-price auctions, Dutch Auctions
o Strong strategic equivalence
o The four canonical action forms and their relationships
o ticks (= increments), details
o Spying on some auctions
2 Thu Feb 15
o Reports on assignment 1. Please hand in short hard copy of
descriptions of how you did it, maybe with output for a couple
of examples. Links to your code might be helpful if I want to
take a look.
o Disincentives to truthful bidding
o Evolution of eBay from mail-bid sales (conceptually anyway),
the "California auction" as an abstraction
o Other online closing rules, Amazon & Yahoo
o Taobao, the Chinese online auction site?
o The simplest example of revenue equivalence (section A.2)
--------------------------------------------------------------------------------
Week 3 HOMEWORK: appendix A of S3
Katkar & Lucking-Reiley 2000
Rasmusen 2006 (on sniping)
assignment 3: DUE March 8
3 Tue Feb 20
o Preliminary discussion of some empirical work: Lucking-Reiley 1999,
test of revenue equivalence (see S3 sections 5.9, 5.10,
and 6.5.1). To be continued.
o Some exemplary empirical field work, a senior thesis
from Northwestern University: Katkar & Lucking-Reiley 2000:
"Public vs. Secret Reserve Prices in eBay Auctions:
Results from a Pokémon Field Experiment",
Working Paper, Department of Economics, Vanderbilt University,
Dec. 5, 2000.
3 Thu Feb 22
o Order statistics (section A.4)
o What is eBay's complete algorithm? Raising your own (high)
bid below secret reserve, raising your own (high) bid when
you're less than a bidding increment above the second price,
a simple field experiment.
o Application of order statistics: Expected revenue of second-price
auctions (A.5)
o Derivation of first-price equilibrium from scratch for general
distribution F (sections A.7, A.8)
--------------------------------------------------------------------------------
Week 4 HOMEWORK: chapters 3 and 4 of S3
part I of Riley & Samuelson 1981 (paper #2)
Ockenfels & Roth 2006 (on bidding early)
4 Tue Feb 27
o Third-price auctions: their theory and utility
o A best response calculation, begin equilibrium of first-price
IPV auctions
4 Thu Mar 1
o We'll go over your solutions to assignment 2. Tell us about
your approach. Show us examples. We have an ethernet connection
for laptops, and overhead projector if you can make transparencies.
o Finish equilibrium of first-price IPV auctions using the explicit
method
o eBay as a spectator sport. Some plot histories: Start-End
clustering; wars; advantage of sniping; searching up to
find reserve (chapter 3)
--------------------------------------------------------------------------------
Week 5 HOMEWORK: chapter 5 and appendix B of S3
part II of Riley & Samuelson 1981 (paper #2)
Lucking-Reiley 1999 ("Magic on the Internet")
Reminder: DUE Thursday, March 8: Assignment 3
DUE Tuesday, March 27: one-paragraph written plus
oral report on proposal for term paper projects
5 Tue Mar 6
o Formulating equilibria in value space
o A test of revenue equivalence: D. Lucking-Reiley, "Using field
experiments to test revenue equivalence between auction formats:
Magic on the internet," American Economic Revue, vol. 89, no. 5,
pp. 1063-80, Dec. 1999. See also sections 5.9, 5.10, and 6.5.1.
5 Thu Mar 8
o Compare our experiment last class with theory: FP with reserve
o Discuss assignment #3 (due today) (a) all-pay equilibrium;
(b) Frank Robinson's mail-bid sale
o Implicit collusion: (a) Missed snipes (Ockenfels & Roth 2006);
(b) An equilibrium for early bidding (Rasmusen 2006)
--------------------------------------------------------------------------------
Week 6 HOMEWORK: chapter 6 of S3
Hossain and Morgan 2004
Roth & Ockenfels 2002 (ending rules)
6 Tue Mar 13 Guest: Paul Provost, Christie's
6 Thu Mar 15
o Discussion: Reasons for late bidding, reasons for early bidding,
ending rules on Yahoo and Amazon (Roth & Ockenfels 2002)
o Revenue of IPV symmetric first-price auctions (section A.9);
derive revenue equivalence
o Conditional expectation (section A.10)
o A stronger version of revenue equivalence, expected payment as
a function of your value, and an elegant and famous graphical
interpretation (section A.11)
--------------------------------------------------------------------------------
BREAK
--------------------------------------------------------------------------------
Week 7 HOMEWORK: assignment 3a, DUE April 5
Lucking-Reiley 2000a
appendix C of S3
7 Tue Mar 27
o Review of term paper proposals, please prepare brief oral report.
Class feedback is essential.
o Average-price auction
7 Thu Mar 29
o Discussion of Average-price auction
o Bidder preference revelation and monotonicity of the bidding function
o A new kind of class experiment, Tournament 1.1
o Segue to Riley & Samuelson 1981 (appendix B, paper #2): there
are more auction forms out there, but sometimes generalizing makes
a problem easier! Riley & Samuelson's class of auctions, a more
general form of revenue equivalence, entry value.
--------------------------------------------------------------------------------
Week 8 HOMEWORK: Morgan & Steiglitz 2003 ("The Spite Motive...")
Tue Apr 3
8 o Discussion of Tournament 1.1; then 1.2
o Quick review of Riley & Samuelson's benchmark theory
and revenue equivalence
o Another prototype term paper---"A test of the revenue
equivalence theorem using field experiments on eBay", T. Hossain
and J. Morgan, working paper, Princeton University and
UC Berkeley, 2004.
8 Thu Apr 5
o Assignment 3a is due today, and we'll go over it.
o (con't) Review of hypothesis testing; one-sided binomial test
o Continue Riley & Samuelson 1981 (paper #2), equilibria with reserves,
optimal choice of reserves
--------------------------------------------------------------------------------
Week 9 HOMEWORK: appendix D of text
Kagel 1995 chapt. 7
part III of Riley & Samuelson 1981 (paper #2)
Bulow & Roberts 1989 (paper #3)
9 Tue Apr 10
o The sad-loser's auction
o The Santa-Claus auction
o All-pay auction with reserve
o Tournament 2.1
o A matching auction
9 Thu Apr 12
o Modeling of tournaments
o Tournament 2.2
o Lucking-Reiley 2000a: "Field experiments on the effects of reserve
prices on the internet: More Magic on the internet", another test
of a result in Riley & Samuelson 1981, namely the effect of reserves
on number of bidders, probability of sale, total revenue
o Average-price auction, equilibrium
--------------------------------------------------------------------------------
Week 10 HOMEWORK: Due Thursday, April 26: A one-paragraph
progress report for your term paper, with as
sharp a description of your topic as possible,
plus an annotated list of the references you've
read so far.
Bulow & Klemperer 1996 (paper #5)
assignment 4, DUE May 3
10 Tue Apr 17
o Results of tournament 2.2
o Review of the major laboratory experimental work
o Kagel's experiments with 3rd-price auctions
o Risk aversion ==> overbidding in first-price equilibrium
10 Thu Apr 19
o Risk aversion (con't), revenue ranking, first-price equilibrium
o Overbidding and spite (Morgan and Steiglitz 03)
o Equilibria in tournaments
o Bidding for Paramount
--------------------------------------------------------------------------------
Week 11 HOMEWORK: chapter 7 and 8 of S3
Graham & Marshall 1987
sections 1-3 of Milgrom & Weber 1982
Myerson and Satterthwaite 1983
11 Tue Apr 24
o Bidding for Paramount: discussion, analysis
o Experimental results for the common-value model, Winner's Curse
o Tournaments and evolutionary biology, pairwise competition
and the replicator equation (Morgan & Steiglitz 03, "Pairwise
Competition...")
11 Thu Apr 26
o Due: Updated reports on term paper projects, plus references
o Asymmetric bidders in IPV auctions; discriminatory reserves,
optimal auctions for asymmetric bidders.
--------------------------------------------------------------------------------
Week 12 HOMEWORK: sections 1-3 of Milgrom & Weber 1982
Myerson and Satterthwaite 1983
Morgan 2001
Bulow & Klemperer 1994
12 Tue May 1
o The revelation principle; Riley and Samuelson auctions are optimal
selling mechanisms (Appendix C)
o The importance of an extra bidder: Bulow and Klemperer 1996,
"Auctions versus negotiations" (paper #5)
o DVD excerpt: "I sell Anything" (1934); Spot Cash Cutler and shills
o An experiment in cheating---collusion
o Cassady on shills, rings, etc.
12 Thu May 3 (as time permits)
o Assignment 4 due Fri (I'll give some hints)
o How to cheat: Graham & Marshall 1987, "Collusive bidding behavior
at single-object second-price and English auctions" (paper #8)
o Interrelated values: Milgrom & Weber 1982, "Theory of auctions
and competitive bidding," affiliated values; linkage principle,
revenue ranking
o An impossibility result for bilateral trade: Myerson and
Satterthwaite 1983, "Efficient Mechanisms for Bilateral Trading"
(paper #6)
o Price bubbles in the laboratory (Vernon Smith et al.)
o Double auctions, asset markets, agent-based simulation
--------------------------------------------------------------------------------
o Bulow and Klemperer 1994, "Rational Frenzies and Crashes"
--- rational behavior can lead to weird-looking prices
(paper #7)
o DVD excerpt: "Dressed to Kill" (1946); Sherlock Holmes and a
multi-unit auction
o Multi-unit auctions: No efficient uniform-price multi-unit auction;
VCG mechanism. Morgan, "Efficiency in auctions: Theory and practice" (2001)
(paper #4)