10949 Electronic Auctions and Markets: Algorithmic Mechanism Design1

Credits: 3 advanced credits in Economics

Prerequisites: 36 credits, including Introduction to Statistics for Students of Social Sciences I, Introduction to Statistics for Students of Social Sciences II, Price Theory I, Price Theory II. Students must also fulfill all English requirements and bibliographic instruction in the library.

Course development: Dr. Rica Gonen

Objectives: This course offers students a foundation in designing auctions and mechanisms in the Internet environment. The mechanisms combine economics with computer science algorithms and computational theory. Course topics range from introduction to classical results in auction theory to a tough in advanced topics from the research frontier. The course does not require prior knowledge in advanced topics or in computer science.

Topics: Basic concepts in game theory;dominant strategies; Nash equilibrium; basic concepts in auction theory; English auction; Dutch auction; private values; risk neutrality; efficient auction; incentive compatibility; optimal auction; classical auction mechanisms; open cry auction; sealed bid auction; first price auction; second price auction; English auction and second price auction equivalence; Dutch auction and first price auction equivalence; the revelation principle; reserve prices; the revenue equivalence theorem; risk averse buyers; asymmetry among buyers; interdependent values; the winnerís curse; individual rationality; Vickery-Clarke-Groves mechanisms; budget balance; double sided auctions; double sided auction impossibility; multi-unit auctions; all-pay auctions; Ausubel auctions; revenue maximization; combinatorial auctions; single minded bidders; multi minded bidders; use cases for combinatorial auctions; FCC; air pollution auctions; efficient allocation as an NP-hard problem; practical solutions for finding efficient allocations; efficiency approximation algorithms; incentive compatible greedy algorithms; online auctions; incentive compatible online auctions; combinatorial online auctions; incentive compatible pricing schemes; e-bay auctions; ad words auctions; click-through-rate concept; general second price auctions; envy free equilibrium; the separability assumption; ;the ladder auction.

1 Students may write a seminar paper in this course, although it is not required.