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lecture1 - Introduction to Auction Theory Econ 177 Spring...

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Introduction to Auction Theory Econ 177 Spring 2011
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Introduction: A Historical Perspective Herodotus reports that auction were used in Babylon as early as 500 B.C. 193 A.D. the Pretorian Guard sold the Roman Empire by means of an auction Wide array of commodities sold by means of auction – Tobacco, fish, fresh flowers – Bond issues by public utilities and long-term U.S. Treasury securities – Facilitate transfer of assets from public to private hands • Industrial enterprises in Eastern Europe and former Soviet Union • Rights to harvest natural resources such as oil and timber • Rights to use the electromagnetic spectrum for communications
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Common Auction Formats • Open ascending price or English auction – Auctioneer begins by calling out low price and raises it in small increments provided there are two or more active bidders – Auction ends when there is only one remaining bidder • The open descending or Dutch auction – Descending counterpart to English auction – Not commonly employed, but it is of conceptual interest
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Common Auction Formats • First-Price, Sealed Bid Auction – Bidders submit bids in sealed envelopes – At a pre-determined time, auctioneer opens all envelopes and ranks bids – Highest bidder obtains object and pays his bid amount
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This note was uploaded on 12/26/2011 for the course ECON 177 taught by Professor Garratt during the Fall '09 term at UCSB.

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lecture1 - Introduction to Auction Theory Econ 177 Spring...

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