sign in sign up
<<
Home , Benny Moldovanu, Lloyd Shapley, Market (economics), Market design, Parag Pathak, Sherwin Rosen

14.125: Design

Last updated: 2/3/14

This is an advanced topics course on market and . We will study existing or new market , understand their properties, and think about whether they can be re-engineered or improved. This course assumes knowledge of the first year PhD sequence, especially microeconomic theory (14.121-4). (14.126) and courses from the sequence are helpful, but not essential as background.

Instructor: , E17-240, [email protected] OH: Wednesday 1-2pm, or by appt TA: Yusuke Narita, [email protected], OH: TBD

Course requirements: There will be three problem sets and one final paper. Depending on final course enrollment, we may ask students to do a class presentation on their final paper. Details will be distributed later in the semester.

Recommended Textbooks: Milgrom, Paul (2004): Putting Theory to Work. Churchill Lectures, Cambridge University Press.

Roth, Alvin E. and Marilda Sotomayor (1990): Two-Sided Matching: A Study in Game- Theoretic Modelling and Analysis. Monograph Series, Cambridge University Press.

These other books may be of :

Krishna, Vijay (2002): . Academic Press.

Klemperer, Paul (2004): : Theory and Practice. Toulouse Lectures, Press.

Moulin, Herv´e(1991): Axioms of Decision Making. Econometric Society Monograph Series, Cambridge University Press.

Shiller, Robert (1998): Macro Markets: Creating Institutions for Managing Society’s Largest Economic Risks. Clarendon Lectures, Oxford University Press.

Outline and References:

1. Introduction • Roth, Alvin E. (2002): “The as Engineer: Game Theory, Experimen- tation, and Computation as Tools for Design Economics.” Econometrica, 70(4), 1341-1378.

1 • Klemperer, Paul (2002): “What Really Matters in Auction Design?” Journal of Economic Perspectives, 16(1): 169-189. • Hahn, Robert W. (1984): “Market Power and Transferable Property Rights.” Quar- terly Journal of Economics, 99(4): 753-765. • Joskow, Paul, Richard Schmalensee, and Elizabeth Bailey (1998): “The Market for Sulfur Dioxide Emissions.” American Economic Review, 88(4), 669-685. • Weitzman, Martin (1977): “Is the or More Effective in Get- ting a to Those Who Need it Most?” The Bell Journal of Economics, 8, 517-524. • Sah, Raj (1987): “Queues, Rations, and Market: Comparisons of Outcomes for the Poor and the Rich.” American Economic Review, 77, 69-77. • Che, Y., I. Gale, and J. Kim (2013): “Allocating Resources to Budget-Constrained Agents.” Review of Economic Studies, 80, 73-107. • Leslie, Phil and Alan Sorenson (2013): “Resale and Rent-Seeking: An Application to Ticket Markets.” Review of Economic Studies, forthcoming • Bleakly, Hoyt and Joe Ferrie (2013): “Land Openings on the Georgia Frontier and the Coase Theorem in the Short- and Long-Run.” Working paper, University of . • Coase, Ronald (1959): “The Federal Commission.” Journal of , 2, 1-41. • Coase, Ronald (1960): “The Problem of .” Journal of Law and Eco- nomics, 3, 1-44.

2. Basic Mechanism Design and -Proofness

• Gibbard, Alan (1973): “Manipulation of Voting Schemes: A General Result.” Econo- metrica , 41(4): 587-601. • Sattherwaite, Mark (1975): “Strategy-proofness and Arrow’s Conditions: Existence and Correspondence Theorems for Voting Procedures and Social Functions.” Journal of Economic Theory, 10: 187-217. • Reny, Phil (2002): “Arrow’s Theorem and the Gibbard-Satterthwaite Theorem: A Unified Approach.” Economics Letters, 70(1): 99-105. • Gibbard, Alan (1977): “Manipulation of Schemes that Mix Voting with Chance.” Econometrica, 45: 665-681. • McLennan, Andy (2010): “Manipulation in Elections with Uncertain Preferences.” Unpublished mimeo, University of Queensland. • Holmstr¨om,Bengt (1979): “Groves Schemes on Restricted Domains.” Econometrica, 47(5): 1137-1144. • Green, Jerry R. and Jean-Jacques Laffont (1977): “Characterization of Satisfactory Mechanisms for the Revelation of Preferences for Public .” Econometrica, 45(2): 427-438. • Milgrom, P. and I. Segal (2002): “The Envelope Theorem for Arbitrary Choice Sets,” Econometrica, 70(2): 583-601.

2 • Bikchandani, S., S. Chatterji, R. Lavi, A. Mualem, N. Nisan, and A. Sen (2006): “Weak Monotonocity Characterizes Deterministic Dominant Strategy Implementa- tion.” Econometrica, 74(4): 1109-1132. • Wilson, Robert (1989): “Efficient and Competitive Rationing.” Econometrica, 57, 1-40. • Sprumont, Yves (1991): “The Division Problem with Single-Peaked Preferences: A Characterization of the Uniform Allocation Rule.” Econometrica, 59, 509-519. • Moulin, Herv´e(2000): “Priority Rules and Other Asymmetric Rationing Methods.” Econometrica, 68(3): 643-684.

3. One-Sided Matching

• Shapley, Lloyd and (1974): “On Cores and Indivisibility.” Journal of , 1: 23-28. • Roth, Alvin E. and Andrew Postlewaite (1977): “Weak Versus Strong Domination in a Market with Indivisible Goods.” Journal of Mathematical Economics, 4: 131-137. • Roth, Alvin E. (1982): “ in a Market with Indivisibilities.” Economics Letters, 9: 127-132. • Hylland, Arnuand and Richard Zeckhauser (1977): “The efficient allocation of indi- viduals to positions.” Journal of Political , 87: 293-314. • Abdulkadiro˘glu,Atila and Tayfun S¨onmez(1999): “House Allocation with Existing Tenants.” Journal of Economic Theory, 88: 233-260. • Roth, Alvin E., Tayfun S¨onmezand M. Utku Unver¨ (2003): “Kidney Exchange.” Quarterly Journal of Economics, 119, 457-488.

4. Stochastic Matching Mechanisms

• Abdulkadiro˘glu,Atila and Tayfun S¨onmez.(1998): “Random Serial Dictatorship and the from Random Endowments in House Allocation Problems.” Econometrica, 66: 689-701. • S¨onmez,Tayfun and Utku Unver¨ (2005): “House Allocation with Existing Tenants: An Equivalence.” Games and Economic Behavior, 52: 153-185. • Pathak, Parag and Jay Sethuraman (2011): “Lotteries in Student Assignment: An Equivalence Result.” Theoretical Economics, 6(1): 1-18. • Bogomolnaia, Anna and Herve Moulin (2009): “A New Solution to the Random Assignment Problem.” Journal of Economic Theory, 100: 295-328. • Kojima, Fuhito and Mihai Manea (2010): “Incentives in the Probabilistic Serial Mechanism.” Journal of Economic Theory, 145: 106-123. • Kojima, Fuhito and Yeon-Koo Che (2010): “The Asymptotic Equivalence of Proba- bilistic Serial and Random Priority Mechanisms.” Econometrica, 78: 1625-1672. • Liu, Qingming and Marek Pycia (2012): “Ordinal Efficiency, Fairness, and Incentives in Large Markets.” Working paper, Columbia University.

3 • Hall, P. (1935): “On Representatives of Subsets.” Journal of Mathematical Society, 19, 26-30. • Dutta, Bhaskar and Debray Ray (1989): “A Concept of Egalitarianism under Par- ticipation Constraints.” Econometrica, 57, 615-35. • Bogolmanaia, Anna and Herve Moulin (2004): “Random Matching under Dichoto- mous Preferences.” Econometrica, 72: 257-279. • Katta, Akshay-Kumar and Jay Sethuraman (2006): “A Solution to the Random Assignment Problem on the Full Domain.” Journal of Economic Theory, 131(1): 231-250. • Roth, Alvin E. , Tayfun S¨onmez, and M. Utku Unver (2005): “Pairwise Kidney Exchange.” Journal of Economic Theory, 125(2): 151-188. • Roth, Alvin E., Tayfun S¨onmez,and Utku Unver¨ (2007): “Efficient Kidney Exchange: in Markets with Compatibility-Based Preferences.” American Economic Review, 97(3): 828-851.

5. Axiomatic

• Ma, Jipeng (1994): “Strategy-proofness and Strict Core in a Market with Indivisi- bilities.” International Journal of Game Theory, 23: 75-83. • S¨onmez,Tayfun (1999): “Strategy-proofness and Essentially Single-valued Cores.” Econometrica, 67(3): 677-689. • Svensson, Lars-Gunnar (1994): “Queue allocation of indivisible goods.” Social Choice and Welfare 11, 323-330. • Svensson, Lars-Gunnar (1999): “Strategyproof Allocation of Indivisible Goods.” So- cial Choice and Welfare 16, 557-567. • Papai, Szilvia (2000): “Strategyproof Assignment by Hierarchical Exchange”, Econo- metrica, 68: 1403-1433. • S¨onmez,Tayfun and Utku Unver¨ (2010): “House Allocation with Existing Tenants: A Characterization.” Games and Economic Behavior, 69(2): 425-445. • Pycia, Marek and Utku Unver¨ (2012): “Incentive Compatible Allocation and Ex- change of Discrete Resources.” Working paper, UCLA.

6. Two-sided matching

• Roth and Sotomayor, Chapters 2-5. • Gale, David and (1962): “College Admissions and the Stability of Marriage.” American Mathematical Monthly, 69: 9-15. • Roth, Alvin E. (1984): “The Evolution of the Labor Market for Medical Interns and Residents: A Case Study in Game Theory.” Journal of , 92: 991-1016. • Niederle, Muriel and Alvin E. Roth (2003): “Relationship Between and Pres- ence of a Matching in Medical Fellowships.” Journal of the American Medical Asso- ciations, 290(9): 1153-1154.

4 • Bulow, Jeremy and Levin, Jonathan (2006): “Matching and Price .” American Economic Review, 96(3): 652-668. • Roth, Alvin E. (1991): “A Natural Experiment in the Organization of Entry Level Labor Markets: Regional Markets for New Physicians and Surgeons in the U.K.” American Economic Review, 81, 415-440.

7. Unraveling, timing, and congestion

• Roth, Alvin E. and X. Xing (1994): “Jumping the Gun: Imperfections and Institu- tions Related to the Timing of Market Transactions.” American Economic Review, 84, 992-1044. • Li, Hao and Sherwin Rosen (1998): “Unraveling in Matching Markets.” American Economic Review, 88(3), 371-387. • Niederle, Muriel and Alvin E. Roth (2003): “Unraveling Reduces the Scope of an Entry Level Labor Market: Gastroentrology with and without a Centralized Match.” Journal of Political Economy, 111(6): 1342-1352. • Avery, Christopher and Jonathan Levin (2010): “Early Admissions at Selective Col- leges.” American Economic Review, 100(6), 2125-2156. • Roth, Alvin E. and X. Xing (1997): “Turnaround Time and Bottlenecks in Market : Decentralized Matching in the Market for Clinical Psychologists.” Journal of Political Economy, 105, 284-329. • Kagel, John and A. Roth (2000): “The Dynamics of Reorganization in Matching Markets: A Laboratory Experiment Motivated by a Natural Experiment.” Quarterly Journal of Economics, 201-235. • Li, Hao and Wing Suen (2000): “Risk Sharing, Sorting, and Early Contracting.” Journal of Political Economy, 108(5): 1058-1087.

8. Matching with Richer Commodity Spaces

• Kelso, Alexander S. and Vincent Crawford (1982): “Job Matching, Coalition Forma- tion, and Gross Substitutes.” Econometrica, 50: 1483-1504. • Gul, Faruk and Ennio Stachetti (1999): “Walrasian Equilibrium with Gross Substi- tutes.” Journal of Economic Theory, 87: 95-124. • Hatfield, John and (2005): “Matching with Contracts.” American Economic Review, 95: 913-935. • Ayg¨un,Orhan and Tayfun S¨onmez (2013): “Matching with Contracts: Comment.” American Economic Review, 103(5): 2050-2051. • Ostrovsky, Michael (2007): “Stability in -Chain Networks.” American Eco- nomic Review, 98(3): 897-923. • Westkamp, Alex (2010): “ and Matching with Contracts.” Journal of Economic Theory, 145(5): 1724-1738. • S¨onmez,Tayfun (2013): “ for Army Career Specialties: Improving the ROTC Branching Mechanism.” Journal of Political Economy, 121(1): 186-219.

5 • S¨onmez,Tayfun and Tobias Switzer (2013): “Matching with (Branch-of-Choice) Con- tracts at the Military Academy.” Econometrica, 81(2): 451-488. • Budish, Eric (2011): “The Combinatorial Assignment Problem: Approximate Com- petitive Equilibrium from Equal Incomes.” Journal of Political Economy, 119(6): 1061-1103. • Budish, Eric and Estellen Cantillon (2012): “The Multi-Unit Assignment Problem: Theory and Evidence from Course Allocation at Harvard.” American Economic Review, 102(5): 2237-2271.

9. Large Two-sided Matching Models

• Postlewaite, Andy and John Roberts (1976): “The Incentives for Price-Taking Be- havior in Large Exchange .” Econometrica, 44(1): 115-129. • Roth, Alvin E. and Elliot Peranson (1999): “The Re-design of the Matching Market for American Physicians: Some Engineering Aspects of Economic Design.” American Economic Review, 89: 748-780. • Kojima, Fuhito and Parag Pathak (2009): “Incentives and Stability in Large Two- Sided Matching Markets.” American Economic Review, 99(3): 608-627. • Kojima, Fuhito, Parag Pathak, and Alvin Roth (2013): “Stability and Incentives in Matching with Couples.” Quarterly Journal of Economics, 128(4): 1585-1632. • Azevedo, Eduardo and Jacob Leshno (2013): “A Framework for Two-Sided Matching Markets.” Working paper, University of Pennsylvania. • Ashlagi, Itai, Yash Kanoria, and Jacob Leshno (2013): “Unbalanced Random Match- ing Markets.” Working paper, MIT Sloan School.

10. Student Assignment and School Choice

• Abdulkadiro˘glu,Atila and Tayfun S¨onmez(2003): “School Choice: A Mechanism Design Approach.” American Economic Review, 93: 729-747. • Pathak, Parag and Tayfun S¨onmez(2008): “Leveling the Playing Field: Sincere and Sophisticated Players in the Boston Mechanism.” American Economic Review, 98(4): 1636-1652. • Erdil, A. and Haluk Ergin (2008): “What’s the Matter with Tie-Breaking? Improving Efficiency in School Choice.” American Economic Review, 98(3), 669-689. • Kesten, Onur (2010): “School Choice with Consent.” Quarterly Journal of Eco- nomics, 125(3): 1297-1348. • Abdulkadiro˘glu,Atila, Parag Pathak, and Alvin E. Roth (2009): “Strategy-proofness vs. Efficiency in Matching with Indifferences: Redesigning the NYC Match.” Amer- ican Economic Review, 99(5): 1954-1978. • Pathak, Parag and Tayfun S¨onmez (2013): “School Admissions Reform in Chicago and England: Comparing Mechanisms by their Vulnerability to Manipulation.” Amer- ican Economic Review, 103(1): 80-106.

6 • Abdulkadiro˘glu,Atila, Yeon-Koo Che, and Yosuke Yasuda (2011): “Resolving Con- flicting Preferences in School Choice: the Boston Mechanism Reconsidered.” Amer- ican Economic Review, 101(1): 399-410. • Morrill, Thayer (2013): “Two Simple Variations on Top Trading Cycles.” Unpub- lished mimeo, NC-State.

11. School Choice and Affirmative Action

• Dur, Umut, Scott Kominers, Parag Pathak, and Tayfun S¨onmez(2013): “The Demise of Walk Zones in Boston: Priorities vs. Precedence.” NBER Working Paper 18981. • Kominers, Scott and Tayfun S¨onmez(2012): “Designing for Diversity in Matching.” Working paper, Boston College. • Ehlers, Lars, Isa Hafalir, Bumin Yenmez, and M. Yildrim (2013): “School Choice with Controlled Choice Constraints: Hard Bounds vs. Soft Bounds.” Working paper, Carnegie-Mellon. • Hafalir, Isa, Bumin Yenmez, and M. Yildrim (2013): “Effective Affirmative Action in School Choice.” Theoretical Economics, 8(2): 325-363.

12. Mechanism Design with Transfers:

• Milgrom, Paul. Putting Auction Theory to Work. Chapter 2-3 • Vickrey, William (1961): “Counterspeculation, Auctions and Competitive Sealed Tenders.” Journal of , 16(1): 8-37. • Bergemann, Dirk and Juuso Valimaki (2010): “The Dynamic Pivot Mechanism.” Econometrica, 78: 771-789. • Ausubel, Larry and Paul Milgrom (2005): “The Lovely but Lonely Vickrey Auction.” in Cramton et. al Combinatorial Auctions, 2005. • Rothkopf, Michael, Thomas Tesiberg and Edward Kahn (1990): “Why are Vickrey Auctions Rare?” Journal of Political Economy, 98(1): 94-109. • Jehiel, P. and B. Moldovanu (2001): “Efficient Design with Interdependent Valua- tions.” Econometrica, 69, 1237-1259. • Bergemann, Dirk and J. V¨alim¨aki(2002): “Information Acquisition and Efficient Mechanism Design.” Econometrica, 70, 1007-1033. • Gershkov, Alex and Benny Moldovanu (2009): “Learning about the Future and Dy- namic Efficiency.” American Economic Review, 99(4), 1576-1587.

13. Bayesian Foundations

• Myerson, Roger and M. Satterthwaite (1983): “Efficient Mechanisms for Bilateral Trading.” Journal of Economic Theory, 29: 265-281. • Hagerty, Kathleen and William P. Rogerson (1987): “Robust Trading Mechanisms.” Journal of Economic Theory, 42, 94-107. • Cramton, Peter, Robert Gibbons, and Paul Klemperer (1987): “Dissolving a Part- nership Efficiently.” Econometrica, 55(3): 615-632.

7 • Segal, Ilya and Michael Whinston (2011): “A Simple Status quo Ensures Participa- tion (with Application to Efficient Bargaining).” Theoretical Economics, 109-125. • Gresik, Tom, and Mark Satterthwaite (1989): “The Rate of Which a Simple Market Becomes Efficient as the Number of Traders Increases: An Asymptotic Result for Optimal Trading Mechanisms.” Journal of Economic Theory, 48, 304-332. • Rustichini, Aldo, Mark A. Satterthwaite and Steven R. Williams (1994): “Conver- gence to Efficiency in a Simple Market with Incomplete Information.” Econometrica, 62, 1041-1063. • Satterthwaite, Mark (2001): “Strategy-proofness and markets.” Social Choice and Welfare 18: 37-58. • Satterthwaite, Mark A. and Steven R. Williams (2002): “The Optimality of a Simple .” Econometrica 70(5): 1841-1864. • Cripps, Martin and Jeroen Swinkels (2006): “Efficiency of Large Double Auctions” Econometrica, 74 [1], 47-92. • Wilson, Robert (1985): “Incentive Efficiency of Double Auctions.” Econometrica, 53: 1101-1116. • Fieseler, K. T. Kittsteiner, and B. Moldovanu (2003): “Partnership, Lemons, and Efficient .” Journal of Economic Theory, 113, 223-234. • d’Aspremont, C. and L. Gerard-Varet (1979): “Incentives and Incomplete Informa- tion.” Journal of , 11: 24-45. • Athey, Susan and Ilya Segal (2013): “An Efficient Dynamic Mechanism.” forthcom- ing, Econometrica • McLean, Richard, and Andrew Postlewaite (2002): “Informational Size and Incentive Compatibility.” Econometrica 70, 2421-2454. • Yamashita, Takuo (2013): “Robust Trading Mechanisms to Strategic .” Working paper, Toulouse.

14. Payoff and

• Milgrom, Putting Auction Theory to Work, Chapter 4-5 • Myerson, Roger (1981): “Optimal Auction Design.” of , 1981. • Heydenreich, Birgit, Rudolf Muller, Rakesh Vohra, and Marc Uetz (2009): “Charac- terization of Revenue Equivalence.” Econometrica, 77, 307-316. • Bulow, J. and J. Roberts (1989): “The Simple Economics of Optimal Auctions.” Journal of Political Economy, 97(5): 1060-1090. • Klemperer, Paul (2003): “Why Every Economist Should Learn Some Auction The- ory.” Advances in Economics and : Invited Lectures to the 8th World Congress of the Econometric Society, M. Dewatripont, L. Hansen, and S. Turnovsky (eds), Cambridge University Press. • Robert G. Hansen (1985): “Auctions with Contingent Payments.” American Eco- nomic Review, 75(4): 862-865.

8 • DeMarzo, Peter, Ilan Kremer, and Andrzej Skrzypacz (2005): “Bidding with Secu- rities: Auctions and Design.” American Economic Review, 95(4): 936-959. • Milgrom, P. and R. Weber (1982): “A Theory of Auctions and Competitive Bidding.” Econometrica, 50: 1089-1122.

15. Noteworthy Auction Results

• McAfee, R.P. and J. McMillan (1987): “Auctions and Bidding.” Journal of Economic Literature, XXV, 699-738. • Levin, Dan and James L. Smith (1994): “Equilibrium in Auctions with Entry.” American Economic Review, 84 (3): 585-599. • Bulow, Jeremy and Paul Klemperer (2009): “Why Do Sellers (Usually) Prefer Auc- tions?” American Economic Review, 99(4): 1544-1575. • McAfee, R. Preston and John McMillan (1992): “Bidding Rings.” American Eco- nomic Review, 82 (3), 579-99. • Asker, John (2010): “A Study of the Internal Organisation of a Bidding Cartel.” American Economic Review, 100(3): 724-762. • Bulow, Jeremy and Paul Klemperer (1996): “Auctions versus Negotiations.” Amer- ican Economic Review, 86(1): 180-94. • Armstrong, M. (2000): “Optimal Multi-Object Auctions.” Review of Economic Stud- ies, 67, 455-481. • Milgrom, Paul R. and Robert J. Weber (1982): “The of Information in a Sealed-Bid Auction.” Journal of Mathematical Economics, 10(1): 105-14.

16. Online Markets

• Roth, A. E. and A. Ockenfels (2002): “Late-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon.” American Economic Review, 92(4): 1093-1103. • Ely, Jeff and Tanjim Hossain (2009): “Sniping and Squatting in Auction Markets.” American Economic Journal: , 1(2): 68-94. • Demange, Gabrielle, , and Marilda Sotomayor. 1986. “Multi-Item Auc- tions.” Journal of Political Economy, 94: 863-872. • Edelman, B., M. Ostrovsky, and M. Schwarz (2007): “Internet Advertising and the Generalized Second Price Auction: Selling Billions of Dollars of Keywords.” Ameri- can Economic Review, 97(1): 242-259. • Levin, Jonathan (2013): “The Economics of Internet Markets.” Advances in Eco- nomics and Econometrics, Edited by D. Acemoglu, M. Arellano and E. Dekel. • Einav, Liran, Chiara Farronato, Jonathan Levin, and Neel Sundaresan (2013): “Sales Mechanisms in Online Markets: What Happened to Internet Auctions?” Working paper,

17. Information Interdependencies and Aggregation

9 • Cremer, Jacques and Richard McLean (1985): “Optimal Selling Strategies under Uncertainty for a Discriminating Monopolist when Demands are Interdependent.” Econometrica, 53 (2): • Cremer, Jacques and Richard McLean (1988): “Full Extraction of the Surplus in Bayesian and Dominant Strategy Auctions.” Econometrica, 56(6): 1247-1257. • McAfee, R. Preston and Phil Reny (1992): “Correlated Information and Mechanism Design.” Econometrica, 60 (2): 395-421. • Milgrom, Paul (1979): “A Theorem for Competitive Bidding with Dif- ferential Information.” Econometrica, 47, 679-688. • Kremer, I. (2002): “Information Aggregation in Common Value Auctions.” Econo- metrica, 70, 1675-1682. • Persico, N. (2000): “Information Acquisition in Auctions.” Review of Economic Studies, 71(1): 165-194. • Pesendorfer, W. and J. Swinkels (1997): “The Loser’s Curse and Information Acqui- sition in Common Value Auctions.” Econometrica, 65: 1247-1281. • Pesendorfer W., and J. Swinkels (2000): “Efficiency and Information Aggregation in Auctions.” American Economic Review, 90: 499-425. • Atakan, Alp., and Mehmet Ekmeki (2014): “Auctions, Actions, and the Failure of Information Aggregation.” American Economic Review, forthcoming. • Jackson, Matthew and Ilan Kremer (2006): “The Relevance of a Choice of Auction Format in a Competitive Environment.” Review of Economic Studies, 73(4): 961- 981.

18. Multi Unit Auctions

• Krishna, Vijay. Auction Theory. Second Edition. Academic Press. • Wilson, Robert (1979): “Auctions of Shares.” Quarterly Journal of Economics, 93:675-689. • Back, Kerry and and J. Zender (1993): “Auctions of Divisible Goods: On the Ratio- nale for the Treasury Experiment.” Review of Financial Studies, 6: 733-764. • Nyborg, K., K. Rydqvist, and S. Sundaresan (2002): “Bidder Behavior in Multiunit Auctions: Evidence from Swedish Treasury Auctions.” Journal of Political Economy, 110: 394-424. • Kremer, Ilan and Kjell Nyborg (2004): “Divisible Good Auctions: The Role of Allocation Rules.” Rand Journal of Economics, 35(1): 147-159.

19. Package and Combinatorial Auctions

• Bernheim, B. Douglas and Whinston, Michael (1986): “Menu Auctions, Resource Allocation, and Economic Influence.” Quarterly Journal of Economics, 101(1): 1-32. • Milgrom, P. (2000): “Putting Auction Theory to Work: The Simultaneous Ascending Auction.” Journal of Political Economy, 108(2): 245-272.

10 • Dasgupta, P. and E. Maskin (2000): “Efficient Auctions.” Quarterly Journal of Economics, 115: 341-388. • Ausubel, L. and P. Milgrom (2002): “Ascending Auctions with Package Bidding,” B.E. Press, 1(1). • Lehmann, Daniel, Liadan O’Callaghan, and Yoav Shoham (2002): “Truthful Rev- elation in Approximately Efficient Combinatorial Auctions.” Journal of the ACM, 49(5): 577-602. • Day, Robert and Paul Milgrom (2008): “Core-Selecting Package Auctions.” Inter- national Journal of Game Theory • Milgrom, Paul and Ilya Segal (2013): “Deferred-Acceptance Auctions.” Working paper, Stanford University.

20. Resale • Jehiel, P., B. Moldovanu, and E. Stacchetti (1996): “How (not) to Sell Nuclear Weapons.” American Economic Review, 86: 814-829. • Jehiel, P. and B. Moldovanu (1999): “Resale Markets and the Assignment of Property Rights.” Review of Economic Studies, 66: 971-991. • Krishna, Vijay and Isa Halafir (2009): “Asymmetric Auctions with Resale.” Ameri- can Economic Review, 98(1): 87-112. • Haile, P., (2001: “Auctions with Resale Markets: An Application to U.S. Forest Timber Sales.” American Economic Review, 92(3), 399-427. • Jehiel, P. and Armando Gomes (2005): “Dynamic Processes of Social and Economic Interactions: On the Persistence of Inefficiencies.” Journal of Political Economy, 113(3): 626-667. • Zheng, Charles (2002): “Optimal Auctions with Resale.” Econometrica, 70: 2197- 2224. • Garratt, Rodney, and Thomas Tr¨oger(2006): “Speculation in Standard Auctions with Resale.” Econometrica, 74: 753-769. • Garratt, Rodney, Thomas Tr¨oger,and Charles Zheng (2009): “ via Resale.” Econometrica, 77(4): 1095-1136.

21. Simplicity and Limited Rationality

• Harrison, Glenn (1989): “Theory and Misbehavior in First-Price Auctions.” Ameri- can Economic Review, 79, 749-762. • Roth, Alvin and Uriel G. Rothblum (1999): “Truncation strategies in matching markets - in search of advice for participants.” Econometrica, 67, 21-43. • Dasgupta, Partha and (2009): “On the Robustness of Majority Rule.” Journal of the European Economic Association, 6(5): 949-973. • Milgrom, Paul (2009): “Assignment Messages and Exchanges.” American Economic Journal: Microeconomics, 1:2, 95-113. • Milgrom, Paul (2010): “Simplified Mechanism Design with an Application to Spon- sored Search Auctions.” Games and Economic Behavior, 70(1): 62-70.

11 • Segal, Ilya (2006): “ in Economic Mechanisms,” in Advances in Eco- nomics and Econometrics: Theory and Application, Ninth World Congress (Econo- metric Society Monographs), ed. by Richard Blundell, Whitney K. Newey, and Torsten Persson, Cambridge University Press. • Eyster, Erik and (2005): “Cursed Equilibrium.” Econometrica, 73(5), 1623-1672. • Crawford, Vince and Nagore Iriberri (2007): “Level-k Auctions: Can a Nonequilib- rium Model of Strategic Thinking Explain the Winner’s Curse and Overbidding in Private-Value Auctions?” Econometrica, 75(6): 1721-1770. • Fudenberg, Drew and David Levine (1993): “Self-Confirming Equilibrium.” Econo- metrica, 61(3), 523-545. • Esponda, Ignacio (2009): “Information Feedback in First Price Auctions.” Rand Journal of Economics, 39: 491-508. • Bergemann, D. and Stephen Morris (2007): “An Ascending Auction for Interde- pendent Values: Uniqueness and Robustness to Strategy Uncertainty.” American Economic Review, P & P, 97, 125-130. • Chung, Kim-Sau and Jeff Ely (2007): “Foundations of Dominant Strategy Mecha- nisms.” Review of Economic Studies, 74, 447-476.

22. Financial Markets

• Pagano, Marco and Ailsa Roell (1996): “Transparency and Liquidity: A Comparison of Auction and Dealer Markets with Informed Trading.” Journal of Finance, 51(2): 579-611. • Asquith, Paul, Thomas Covert, and Parag Pathak (2013): “The Effects of Manda- tory in Financial : Evidence from Corporate .” NBER Working Paper 19417. • Athanasoulis, Stefano and Robert Shiller (2001): “World Income Components: Mea- suring and Exploiting Risk Sharing Opportunities.” American Economic Review, 91(4): 1031-1054. • Athanasoulis, Stefano and Robert Shiller (2000): “The Significance of the Market Portfolio.” Review of Financial Studies, 13(2): 301-329. • Acharya, Viral and Alberto Bisin (2014): “Centralized vs. Over the Counter Mar- kets.” Journal of Economic Theory, 149, 153-182. • Duffie, Darrell, Nicolae Garleanu, and Lasse Pedersen (2005): “Over the Counter Markets.” Econometrica, 73: 1815-1847. • Glosten, Lawrence and Paul R. Milgrom (1985): “Bid, ask, and transaction in a specialist market with heterogenously informed traders.” Journal of , 14(1): 71-100. • Kyle, Pete (1985): “Continuous Auctions and Insider Trading.” Econometrica, 53(6): 1315-1335. • Zhu, Haoxiang (2013): “Do Dark Pools Harm ?” Review of Financial Studies, forthcoming

12 • Fuchs, Willie and Andy Skrypacz (2013): “The and Benefits of Dynamic Trad- ing in a Lemons Market.” Working paper, Stanford University. • Budish, Eric, Peter Cramton, and John Shim (2013): “The High-Frequency Trading Arms Race: Frequent Batch Auctions as a Market Design Response.” Working paper, . • Ait-Sahalia, Yacine and Mehmet Saglam (2013): “High Frequency Traders: Taking Advantage of Speed.” NBER Working Paper 19531.

23. Computer Science-Inspired Approaches, TBD

• Hartline, Jason (2012): Approximation in Economic Design, Unpublished notes. • Segal, Ilya (2003): “Optimal Pricing Mechanisms with Unknown Demand.” Ameri- can Economic Review, 93(3), 509-529.

13