Official Matters

Economics 704 is the second half of the Economics Department’s two-semester sequence in Advanced Microeconomics, intended for second-year Ph.D. students.  (Economics 703, the first half of the sequence, is taught by Professor Peter Cramton in the fall semester.)  In Spring 2008, the course will focus on auction theory, matching theory, and the relationship between auction theory and matching theory.  Other topics that are treated in some years include: sequential bargaining under incomplete information; and equilibrium refinements. Topics can possibly be added, upon request.

All official course announcements will be posted on the course home page:

http://www.ausubel.com/econ704

Some of the course materials will reside in a password-protected area.  If you do not already have the username and password, please email the professor to obtain it. 

Class will not meet on Tuesday February 5, 2008.  Makeup times will be determined in class.

Texts

    Required:

P. Milgrom, Putting Auction Theory to Work, Cambridge University Press, 2004 (paperback).

A. E. Roth and M. Sotomayor, Two-Sided Matching: A Study in Game-Theoretic Modeling and Analysis, Cambridge Univ. Press, 1992 (paperback).

    Recommended:

V. Krishna, Auction Theory, Academic Press, 2002.

Course Times

Tuesdays/Thursdays 2:00 pm - 3:15 pm, Tydings 2102.

Office Hours

Tuesdays/Thursdays 11:00 am - 12:00 noon, Tydings 4128A.

Preliminary Syllabus (approximately two weeks per topic)

1. Overview of Auction Theory I: Single Items

   * Ausubel, L. (2003), “Auction Theory for the New Economy” (short survey aimed toward grad students), Sections 1-3

      Krishna, V., Auction Theory, Chapters 3, 6, 7, 9

      McAfee, P. and J. McMillan (1987), “Auctions and Bidding,” Journal of Economic Literature, 25: 699–738

   * Maskin, E. (1992), “Auctions and Privatization,” in Horst Siebert, ed., Privatization: Symposium in Honor of Herbert Giersch. Tubingen: Mohr (Siebeck), 115–136

   * Milgrom, P. and R. Weber (1982), “A Theory of Auctions and Competitive Bidding,” Econometrica, 50: 1089-1122

      Cremer, J. and R. McLean (1985), “Optimal Selling Strategies under Uncertainty for a Discriminating Monopolist when Demands are Interdependent,” Econometrica, 53: 345-362

   * Edelman, B., M. Ostrovsky and M. Schwarz (2007), “Internet Advertising and the Generalized Second-Price Auction: Selling Billions of Dollars Worth of Keywords,” American Economic Review, 97(1): 242-259

    

2. Overview of Auction Theory II: Multiple Identical Items

   * Ausubel, L. (2003), “Auction Theory for the New Economy” (short survey aimed toward grad students), Sections 4-5

      Krishna, V., Auction Theory, Chapters 12-14

   * Vickrey, W. (1961), “Counterspeculation, Auctions, and Competitive Sealed Tenders,” Journal of Finance, 1961, 16: 8-37

   * Ausubel, L. (2004), “An Efficient Ascending-Bid Auction for Multiple Objects,” American Economic Review, 94: 1452-1475

      Ausubel, L. et al (2007), “The Hungarian Auction,” in progress

    

3. Overview of Auction Theory III: Heterogeneous Items

   * Ausubel, L. (2003), “Auction Theory for the New Economy” (short survey aimed toward grad students), Sections 6-7

      Krishna, V., Auction Theory, pp. 76-80

      Ausubel, L. and P. Milgrom (2004), “The Lovely but Lonely Vickrey Auction,” book chapter

    

4. Parallels between Auction Theory and General Equilibrium Theory

      Arrow, K., H. Block and L. Hurwicz (1959), “On the Stability of the Competitive Equilibrium, II,” Econometrica, 27(1): 82-109

      Scarf, H. (1960), “Some Examples of Global Instability of the Competitive Equilibrium,” International Economic Review, 1(3): 157-172

   * Gul, F. and E. Stacchetti (2000), “The English Auction with Differentiated Commodities,” Journal of Economic Theory, 92(1): 66-95

   * Ausubel, L. (2006), “An Efficient Dynamic Auction for Heterogeneous Commodities,” American Economic Review, 96: 602-629

   * Sun, N. and Z. Yang (2006), “Double-Track Auction and Job Matching Mechanisms,” working paper

    

5. Matching Theory I: The Marriage Model

   * Roth, A. and M. Sotomayor, Two-Sided Matching: A Study in Game-Theoretic Modeling and Analysis, Chapters 2-4

      Gale, D. and L. Shapley (1962), “College Admissions and the Stability of Marriage,” American Mathematical Monthly, 69: 9-15

    

6. Matching Theory II: Many-to-One Matching

   * Roth, A. and M. Sotomayor, Two-Sided Matching: A Study in Game-Theoretic Modeling and Analysis, Chapters 5-6

      Shapley, L. and M. Shubik (1972), “The Assignment Game I: The Core,” International Journal of Game Theory, 1, 111-130

   * Abdulkadiroglu, A. and T. Sonmez (2003), “School Choice: A Mechanism Design Approach,” American Economic Review, 93: 729-747

      Morrill, T. (2007), “The Roommates Problem,” working paper

      Roth, A. and X. Xing (1994), “Jumping the Gun: Imperfections and Institutions Related to the Timing of Market Transactions,” American Economic Review, 84: 992-1044

      Roth, A. and E. Peranson (1999), “The Redesign of the Matching Market for American Physicians: Some Engineering Aspects of Economic Design,” American Economic Review, 89: 748-780

      Roth, A. (2002), “The Economist as Engineer: Game Theory, Experimental Economics and Computation as Tools of Design Economics,” Econometrica, 70: 1341-1378

    

7. Matching Theory III: Money as a Continuous Variable

   * Roth, A. and M. Sotomayor, Two-Sided Matching: A Study in Game-Theoretic Modeling and Analysis, Chapters 7-9

   * Kelso, A. and V. Crawford (1982), “Job Matching, Coalition Formation, and Gross Substitutes,” Econometrica, 50: 1483-1504

    

8. Links Between Auction Theory and Matching Theory

   * Ausubel, L. and P. Milgrom (2004), “Ascending Proxy Auctions,” book chapter

   * Hatfield, J. and P. Milgrom (2004), “Auctions, Matching and the Law of Aggregate Demand,” Stanford University, working paper

   * Ostrovsky, M. (2005), “Stability in Supply Chain Networks,” Stanford University, working paper

[And more to be added ...]