An Introduction to Auction Theory

The practical importance of auction theory is widely recognized. Indeed, economists have been recognized for their contribution to the design of several auction-like mechanisms, such as the U. S. Federal Communications Commission spectrum auctions, the 3G auctions in Europe and beyond, and the auction markets for electricity markets around the world.

Moreover, auction theory is now seen as an important component of an economist's training. For example, some of the more celebrated results from the single-object auction theory are now usually taught in advanced undergraduate and first-year graduate courses on the economics of information. The techniques and insights gained from the study of auction theory provide a useful starting point for those who want to venture into the economics of information, mechanism design, and regulatory economics.

This book provides a step-by-step, self-contained treatment of the theory of auctions. The aim is to provide an introductory textbook that will allow students and readers with a calculus background to work through all the basic results. Coverage includes: the basic independent-private-model; the effects of introducing correlation in valuations on equilibrium behaviour and the seller's expected revenue; mechanism design; and the theory of multi-object auctions. The paperback edition of the text includes a new chapter which acts as a guide to current developments in auction theory.

Flavio Menezes joined the University of Queensland as a Chair in Economics after more than a decade at the Australian National University, where he was, amongst other responsibilities, the Foundation Director of the Australian Centre of Regulatory Economics. Flavio is also a former part-time Vice President and Senior Consultant with the Regulatory Economics and Public Policy Practice at CRA International in Canberra. Flavio Menezes has published widely in the economics of information and uncertainty. He is regarded as Australasia's leading auction expert. Paulo Monteiro was Associate Professor at Federal University of Rio de Janeiro and then at IMPA (Institute of Pure and Applied Mathematics.) He is presently at the Postgraduate School of Economics of the Getúlio Vargas Foundation (FGV-EPGE). Monteiro researches on infinite dimensional general equilibrium theory, mechanism design, and auction theory.