Market Design [Syllabus]
Professor Peter Cramton
Economists increasingly are asked to design markets in restructured industries to promote desirable outcomes. This course studies the new field of market design. The ideas from game theory and microeconomics are applied to the design of effective market rules. Examples include electricity markets, spectrum auctions, environmental auctions, and auctions of takeoff and landing slots at congested airports. The emphasis is on both the design of high-stake auction markets and bidding behavior in these markets.
Prerequisite: A vivid imagination and a tolerance for abstraction are essential prerequisites for this course. In addition, Economics 414 (Game Theory) or consent of the instructor is required of all students. If you struggled in Economics 414 (C or worse), then this course is not for you.
Web exercises can be found at https://arielrubinstein.org/gt/student/. Your user name is CR623U<email>, where <email> is your email address (e.g., CR623Ustudent@email.com). The class password is t458441Vt. It is case sensitive.
* indicates papers emphasized in class.
Lawrence M. Ausubel and Peter Cramton, “Auctioning Many Divisible Goods,” Journal of the European Economic Association, 2, 480-493, April-May 2004.
Ausubel, Lawrence M., Peter Cramton, R. Preston McAfee, and John McMillan. 1997. “Synergies in Wireless Telephony: Evidence from the Broadband PCS Auctions,” Journal of Economics and Management Strategy, 6:3, 497-527.
*Cramton, Peter. 2002. “Spectrum Auctions,” in Martin Cave, Sumit Majumdar, and Ingo Vogelsang, eds., Handbook of Telecommunications Economics, Amsterdam: Elsevier Science B.V., Chapter 14, 605-639, 2002. [Presentation]
*Ausubel, Lawrence M. and Paul Milgrom. 2002. “Ascending Auctions with Package Bidding,” Frontiers of Theoretical Economics: Vol. 1: No. 1, Article 1. https://www.bepress.com/bejte/frontiers/vol1/iss1/art1. [presentation]
*Ausubel, Lawrence M., Peter Cramton, and Paul Milgrom, “The Clock-Proxy Auction: A Practical Combinatorial Auction Design,” in Peter Cramton, Yoav Shoham, and Richard Steinberg (eds.), Combinatorial Auctions, Chapter 5, MIT Press, 2006. [presentation]
*“The Convergence of Market Designs for Adequate Generating Capacity,” (with Steven Stoft), Working Paper, University of Maryland, March 2006. [presentation]
Roth, Alvin E. and Axel Ockenfels. 2002. “Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet,” American Economic Review, 92, 1093-1103.
Kahn, Alfred E., Peter Cramton, Robert H. Porter, and Richard D. Tabors. 2001. “Pricing in the California Power Exchange Electricity Market: Should California Switch from Uniform Pricing to Pay-as-Bid Pricing?” Blue Ribbon Panel Report, California Power Exchange.