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slide29-nov11 - ECON 401: Auction: introduction Siyang...

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ECON 401: Auction: introduction Siyang Xiong Rice University November 11, 2011 Xiong (Rice University) ECON 401 November 11, 2011 1 / 13
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What is an auction? http://www.youtube.com/watch?v=ACRbgKA0YrU Xiong (Rice University) ECON 401 November 11, 2011 2 / 13
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Why auction? sell Picasso&s painting ± there is no such market; one seller and a few buyers; seller does not know buyer&s maximal price to buy; if he knew, he would charge that price; buyer will not tell the true maximal value either; auction is a mechanism to let buyers compete, driving the price to the many mechanisms in real life is a generalize auction; bargaining; NYSE, trading process ²double auction. National Resident Matching Program ± 20,000 US physicians are matched annually to hospital residency programs; Xiong (Rice University) ECON 401 November 11, 2011 3 / 13
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How does auction work in real life? Herodotus reports that auctions were used in Babylon as early as 500 In 193 A.D., having killed the Emperor Pertinax, in a bold move the Pratorian Guard proceded to sell o/ the entire Roman Empire by the winning bid was a promise of 25,000 sesterces per man to the
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This note was uploaded on 02/09/2012 for the course ECON 401 taught by Professor Siyang during the Spring '11 term at Rice.

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slide29-nov11 - ECON 401: Auction: introduction Siyang...

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