AUCTION MECHANISM DESIGN

Auctions are markets with strict regulations governing the information available to traders in the market and the possible actions they can make. Due to the fact that well designed auctions achieve desired economic outcomes, they have been widely used in solving real-world optimization problems, and in structuring stock or futures exchanges. Auctions also provide a very valuable testing-ground for economic theory, and they play an important role in computer-based control systems.

Auction mechanism design aims to manipulate the rules of an auction so as to achieve specific goals. Economists traditionally exploit mathematical methods, mainly game theory, to analyze auctions and design new auction forms. However, due to high complexity in the dynamics of an auction, the mathematical models are typically simplified to obtain results, which make it difficult to apply their findings to the usually much more complicated market environments in the real world.

This talk surveys the theoretical and empirical approaches to auction mechanisms and trading strategies, and build the foundation for further research in the field.