Putting Auction Theory to Work Paul Milgrom

This book provides a comprehensive introduction to modern auction theory and its important new applications. It is written by a leading economic theorist whose suggestions guided the creation of the new spectrum auctions designs. Aimed at graduate students and professionals in economics, the book gives the most up-to-date treatments of both traditional theories of "optimal auctions" and newer theories of multi-unit auctions and package auctions, and shows by example how these theories are used. The analysis explores the limitations or prominent older designs, such as the Vickery auction design, and evaluates the practical responses to those limitations. It explores the tension between the traditional theory of auctions with a fixed set of bidders, in which the seller seeks to squeeze as much revenue as possible from the fixed set, and the theory of auctions with endogenous entry, in which bidder profits must be respected to encourage participation. It shows how seemingly different auction designs can lead to nearly identical outcomes if the participating bidders are the same - a finding that focuses attention on (1) attracting bidders and (2) minimizing the cost of running the auction and bidding in it. It shows how new auction designs can accommodate procurement settings and sales with many interrelated goods. Paul Milgrom is Leonard and Shirley Ely Professor of Humanities and Social Sciences and professor of Economics at Stanford University. He has also taught at Harvard University and MIT. A Fellow of the American Academy of Arts and Sciences and the Econometric Society. Professor Milgrom has served on the editorial boards of the American Economic Review, Econometrica, the Journal of Economic Theory, The journal of Economics and Management Strategy, and Games and Economic Behavior. He is coauthor with John Roberts of the 1992 landmark text Economics, Organization, and Management. Professor Milgrom's research has been published in the leading journals in economics, including the American Economic Review, Econometrica, the Journal of Political Economy, the Quarterly Journal of Economics, the Journal of Economic Theory, the Journal of Economic Perspectives, and the Journal of Mathematical Economics. His current interests are in incentive theory, planning, and auction market design. Professor Milgrom is internationally known for his work in spectrum auction designs.