14.125: Market Design

14.125: Market Design Last updated: 2/3/14 This is an advanced topics course on market and mechanism design. We will study existing or new market institutions, understand their properties, and think about whether they can be re-engineered or improved. This course assumes knowledge of the first year economics PhD sequence, especially microeconomic theory (14.121-4). Game theory (14.126) and courses from the industrial organization sequence are helpful, but not essential as background. Instructor: Parag Pathak, E17-240, ppathak@mit.edu OH: Wednesday 1-2pm, or by appt TA: Yusuke Narita, narita@mit.edu, OH: TBD Course requirements: There will be three problem sets and one final paper. Depending on final course enrollment, we may ask students to do a class presentation on their final paper. Details will be distributed later in the semester. Recommended Textbooks: Milgrom, Paul (2004): Putting Auction Theory to Work. Churchill Lectures, Cambridge University Press. Roth, Alvin E. and Marilda Sotomayor (1990): Two-Sided Matching: A Study in Game- Theoretic Modelling and Analysis. Econometric Society Monograph Series, Cambridge University Press. These other books may be of interest: Krishna, Vijay (2002): Auction Theory. Academic Press. Klemperer, Paul (2004): Auctions: Theory and Practice. Toulouse Lectures, Princeton University Press. Moulin, Hervé (1991): Axioms of Cooperative Decision Making. Monograph Series, Cambridge University Press. Econometric Society Shiller, Robert (1998): Macro Markets: Creating Institutions for Managing Society s Largest Economic Risks. Clarendon Lectures, Oxford University Press. Outline and References: 1. Introduction Roth, Alvin E. (2002): The Economist as Engineer: Game Theory, Experimentation, and Computation as Tools for Design Economics. Econometrica, 70(4), 1341-1378. 1

Klemperer, Paul (2002): What Really Matters in Auction Design? Economic Perspectives, 16(1): 169-189. Journal of Hahn, Robert W. (1984): Market Power and Transferable Property Rights. Quarterly Journal of Economics, 99(4): 753-765. Joskow, Paul, Richard Schmalensee, and Elizabeth Bailey (1998): The Market for Sulfur Dioxide Emissions. American Economic Review, 88(4), 669-685. Weitzman, Martin (1977): Is the Price System or Rationing More Effective in Getting a Commodity to Those Who Need it Most? The Bell Journal of Economics, 8, 517-524. Sah, Raj (1987): Queues, Rations, and Market: Comparisons of Outcomes for the Poor and the Rich. American Economic Review, 77, 69-77. Che, Y., I. Gale, and J. Kim (2013): Allocating Resources to Budget-Constrained Agents. Review of Economic Studies, 80, 73-107. Leslie, Phil and Alan Sorenson (2013): Resale and Rent-Seeking: An Application to Ticket Markets. Review of Economic Studies, forthcoming Bleakly, Hoyt and Joe Ferrie (2013): Land Openings on the Georgia Frontier and the Coase Theorem in the Short- and Long-Run. Working paper, University of Chicago. Coase, Ronald (1959): The Federal Communications Commission. Journal of Law and Economics, 2, 1-41. Journal of Law and Eco- Coase, Ronald (1960): The Problem of Social Cost. nomics, 3, 1-44. 2. Basic Mechanism Design and Strategy-Proofness Gibbard, Alan (1973): Manipulation of Voting Schemes: A General Result. Econometrica, 41(4): 587-601. Sattherwaite, Mark (1975): Strategy-proofness and Arrow s Conditions: Existence and Correspondence Theorems for Voting Procedures and Social Welfare Functions. Journal of Economic Theory, 10: 187-217. Reny, Phil (2002): Arrow s Theorem and the Gibbard-Satterthwaite Theorem: A Unified Approach. Economics Letters, 70(1): 99-105. Gibbard, Alan (1977): Manipulation of Schemes that Mix Voting with Chance. Econometrica, 45: 665-681. McLennan, Andy (2010): Manipulation in Elections with Uncertain Preferences. Unpublished mimeo, University of Queensland. Holmström, Bengt (1979): Groves Schemes on Restricted Domains. Econometrica, 47(5): 1137-1144. Green, Jerry R. and Jean-Jacques Laffont (1977): Characterization of Satisfactory Mechanisms for the Revelation of Preferences for Public Goods. Econometrica, 45(2): 427-438. Milgrom, P. and I. Segal (2002): The Envelope Theorem for Arbitrary Choice Sets, Econometrica, 70(2): 583-601. 2

Bikchandani, S., S. Chatterji, R. Lavi, A. Mualem, N. Nisan, and A. Sen (2006): Weak Monotonocity Characterizes Deterministic Dominant Strategy Implementation. Econometrica, 74(4): 1109-1132. Wilson, Robert (1989): Efficient and Competitive Rationing. Econometrica, 57, 1-40. Sprumont, Yves (1991): The Division Problem with Single-Peaked Preferences: A Characterization of the Uniform Allocation Rule. Econometrica, 59, 509-519. Moulin, Hervé (2000): Priority Rules and Other Asymmetric Rationing Methods. Econometrica, 68(3): 643-684. 3. One-Sided Matching Shapley, Lloyd and Herbert Scarf (1974): On Cores and Indivisibility. Journal of Mathematical Economics, 1: 23-28. Roth, Alvin E. and Andrew Postlewaite (1977): Weak Versus Strong Domination in a Market with Indivisible Goods. Journal of Mathematical Economics, 4: 131-137. Roth, Alvin E. (1982): Incentive Compatibility in a Market with Indivisibilities. Economics Letters, 9: 127-132. Hylland, Arnuand and Richard Zeckhauser (1977): The efficient allocation of individuals to positions. Journal of Political Economy, 87: 293-314. Abdulkadiroğlu, Atila and Tayfun Sönmez (1999): House Allocation with Existing Tenants. Journal of Economic Theory, 88: 233-260. Roth, Alvin E., Tayfun Sönmez and M. Utku Ünver (2003): Kidney Exchange. Quarterly Journal of Economics, 119, 457-488. 4. Stochastic Matching Mechanisms Abdulkadiroğlu, Atila and Tayfun Sönmez. (1998): Random Serial Dictatorship and the Core from Random Endowments in House Allocation Problems. Econometrica, 66: 689-701. Sönmez, Tayfun and Utku Ünver (2005): House Allocation with Existing Tenants: An Equivalence. Games and Economic Behavior, 52: 153-185. Pathak, Parag and Jay Sethuraman (2011): Lotteries in Student Assignment: An Equivalence Result. Theoretical Economics, 6(1): 1-18. Bogomolnaia, Anna and Herve Moulin (2009): A New Solution to the Random Assignment Problem. Journal of Economic Theory, 100: 295-328. Kojima, Fuhito and Mihai Manea (2010): Incentives in the Probabilistic Serial Mechanism. Journal of Economic Theory, 145: 106-123. Kojima, Fuhito and Yeon-Koo Che (2010): The Asymptotic Equivalence of Probabilistic Serial and Random Priority Mechanisms. Econometrica, 78: 1625-1672. Liu, Qingming and Marek Pycia (2012): Ordinal Efficiency, Fairness, and Incentives in Large Markets. Working paper, Columbia University. 3

Hall, P. (1935): On Representatives of Subsets. Journal of Mathematical Society, 19, 26-30. Dutta, Bhaskar and Debray Ray (1989): A Concept of Egalitarianism under Participation Constraints. Econometrica, 57, 615-35. Bogolmanaia, Anna and Herve Moulin (2004): Random Matching under Dichotomous Preferences. Econometrica, 72: 257-279. Katta, Akshay-Kumar and Jay Sethuraman (2006): A Solution to the Random Assignment Problem on the Full Preference Domain. Journal of Economic Theory, 131(1): 231-250. Roth, Alvin E., Tayfun Sönmez, and M. Utku Unver (2005): Pairwise Kidney Exchange. Journal of Economic Theory, 125(2): 151-188. Roth, Alvin E., Tayfun Sönmez, and Utku Ünver (2007): Efficient Kidney Exchange: Coincidence of Wants in Markets with Compatibility-Based Preferences. American Economic Review, 97(3): 828-851. 5. Axiomatic Resource Allocation Ma, Jipeng (1994): Strategy-proofness and Strict Core in a Market with Indivisibilities. International Journal of Game Theory, 23: 75-83. Sönmez, Tayfun (1999): Strategy-proofness and Essentially Single-valued Cores. Econometrica, 67(3): 677-689. Svensson, Lars-Gunnar (1994): Queue allocation of indivisible goods. Social Choice and Welfare 11, 323-330. Svensson, Lars-Gunnar (1999): Strategyproof Allocation of Indivisible Goods. Social Choice and Welfare 16, 557-567. Papai, Szilvia (2000): Strategyproof Assignment by Hierarchical Exchange, Econometrica, 68: 1403-1433. Sönmez, Tayfun and Utku Ünver (2010): House Allocation with Existing Tenants: A Characterization. Games and Economic Behavior, 69(2): 425-445. Pycia, Marek and Utku Ünver (2012): Incentive Compatible Allocation and Exchange of Discrete Resources. Working paper, UCLA. 6. Two-sided matching Roth and Sotomayor, Chapters 2-5. Gale, David and Lloyd Shapley (1962): College Admissions and the Stability of Marriage. American Mathematical Monthly, 69: 9-15. Roth, Alvin E. (1984): The Evolution of the Labor Market for Medical Interns and Residents: A Case Study in Game Theory. Journal of Political Economy, 92: 991-1016. Niederle, Muriel and Alvin E. Roth (2003): Relationship Between Wages and Presence of a Matching in Medical Fellowships. Journal of the American Medical Associations, 290(9): 1153-1154. 4

Bulow, Jeremy and Levin, Jonathan (2006): Matching and Price Competition. American Economic Review, 96(3): 652-668. Roth, Alvin E. (1991): A Natural Experiment in the Organization of Entry Level Labor Markets: Regional Markets for New Physicians and Surgeons in the U.K. American Economic Review, 81, 415-440. 7. Unraveling, timing, and congestion Roth, Alvin E. and X. Xing (1994): Jumping the Gun: Imperfections and Institutions Related to the Timing of Market Transactions. American Economic Review, 84, 992-1044. Li, Hao and Sherwin Rosen (1998): Unraveling in Matching Markets. American Economic Review, 88(3), 371-387. Niederle, Muriel and Alvin E. Roth (2003): Unraveling Reduces the Scope of an Entry Level Labor Market: Gastroentrology with and without a Centralized Match. Journal of Political Economy, 111(6): 1342-1352. Avery, Christopher and Jonathan Levin (2010): Early Admissions at Selective Colleges. American Economic Review, 100(6), 2125-2156. Roth, Alvin E. and X. Xing (1997): Turnaround Time and Bottlenecks in Market Clearing: Decentralized Matching in the Market for Clinical Psychologists. Journal of Political Economy, 105, 284-329. Kagel, John and A. Roth (2000): The Dynamics of Reorganization in Matching Markets: A Laboratory Experiment Motivated by a Natural Experiment. Quarterly Journal of Economics, 201-235. Li, Hao and Wing Suen (2000): Risk Sharing, Sorting, and Early Contracting. Journal of Political Economy, 108(5): 1058-1087. 8. Matching with Richer Commodity Spaces Kelso, Alexander S. and Vincent Crawford (1982): Job Matching, Coalition Formation, and Gross Substitutes. Econometrica, 50: 1483-1504. Gul, Faruk and Ennio Stachetti (1999): Walrasian Equilibrium with Gross Substitutes. Journal of Economic Theory, 87: 95-124. Hatfield, John and Paul Milgrom (2005): Matching with Contracts. Economic Review, 95: 913-935. American Aygün, Orhan and Tayfun Sönmez (2013): Matching with Contracts: Comment. American Economic Review, 103(5): 2050-2051. Ostrovsky, Michael (2007): Stability in Supply-Chain Networks. American Economic Review, 98(3): 897-923. Westkamp, Alex (2010): Market Structure and Matching with Contracts. Journal of Economic Theory, 145(5): 1724-1738. Sönmez, Tayfun (2013): Bidding for Army Career Specialties: Improving the ROTC Branching Mechanism. Journal of Political Economy, 121(1): 186-219. 5

Sönmez, Tayfun and Tobias Switzer (2013): Matching with (Branch-of-Choice) Contracts at the United States Military Academy. Econometrica, 81(2): 451-488. Budish, Eric (2011): The Combinatorial Assignment Problem: Approximate Competitive Equilibrium from Equal Incomes. Journal of Political Economy, 119(6): 1061-1103. Budish, Eric and Estellen Cantillon (2012): The Multi-Unit Assignment Problem: Theory and Evidence from Course Allocation at Harvard. American Economic Review, 102(5): 2237-2271. 9. Large Two-sided Matching Models Postlewaite, Andy and John Roberts (1976): The Incentives for Price-Taking Behavior in Large Exchange Economies. Econometrica, 44(1): 115-129. Roth, Alvin E. and Elliot Peranson (1999): The Re-design of the Matching Market for American Physicians: Some Engineering Aspects of Economic Design. American Economic Review, 89: 748-780. Kojima, Fuhito and Parag Pathak (2009): Incentives and Stability in Large Two- Sided Matching Markets. American Economic Review, 99(3): 608-627. Kojima, Fuhito, Parag Pathak, and Alvin Roth (2013): Stability and Incentives in Matching with Couples. Quarterly Journal of Economics, 128(4): 1585-1632. Azevedo, Eduardo and Jacob Leshno (2013): A Supply and Demand Framework for Two-Sided Matching Markets. Working paper, University of Pennsylvania. Ashlagi, Itai, Yash Kanoria, and Jacob Leshno (2013): Unbalanced Random Matching Markets. Working paper, MIT Sloan School. 10. Student Assignment and School Choice Abdulkadiroğlu, Atila and Tayfun Sönmez (2003): School Choice: A Mechanism Design Approach. American Economic Review, 93: 729-747. Pathak, Parag and Tayfun Sönmez (2008): Leveling the Playing Field: Sincere and Sophisticated Players in the Boston Mechanism. American Economic Review, 98(4): 1636-1652. Erdil, A. and Haluk Ergin (2008): What s the Matter with Tie-Breaking? Improving Efficiency in School Choice. American Economic Review, 98(3), 669-689. Quarterly Journal of Eco- Kesten, Onur (2010): School Choice with Consent. nomics, 125(3): 1297-1348. Abdulkadiroğlu, Atila, Parag Pathak, and Alvin E. Roth (2009): Strategy-proofness vs. Efficiency in Matching with Indifferences: Redesigning the NYC Match. American Economic Review, 99(5): 1954-1978. Pathak, Parag and Tayfun Sönmez (2013): School Admissions Reform in Chicago and England: Comparing Mechanisms by their Vulnerability to Manipulation. American Economic Review, 103(1): 80-106. 6

Abdulkadiroğlu, Atila, Yeon-Koo Che, and Yosuke Yasuda (2011): Resolving Conflicting Preferences in School Choice: the Boston Mechanism Reconsidered. American Economic Review, 101(1): 399-410. Morrill, Thayer (2013): Two Simple Variations on Top Trading Cycles. Unpublished mimeo, NC-State. 11. School Choice and Affirmative Action Dur, Umut, Scott Kominers, Parag Pathak, and Tayfun Sönmez (2013): The Demise of Walk Zones in Boston: Priorities vs. Precedence. NBER Working Paper 18981. Kominers, Scott and Tayfun Sönmez (2012): Designing for Diversity in Matching. Working paper, Boston College. Ehlers, Lars, Isa Hafalir, Bumin Yenmez, and M. Yildrim (2013): School Choice with Controlled Choice Constraints: Hard Bounds vs. Soft Bounds. Working paper, Carnegie-Mellon. Hafalir, Isa, Bumin Yenmez, and M. Yildrim (2013): Effective Affirmative Action in School Choice. Theoretical Economics, 8(2): 325-363. 12. Mechanism Design with Transfers: Vickrey Auction Milgrom, Paul. Putting Auction Theory to Work. Chapter 2-3 Vickrey, William (1961): Counterspeculation, Auctions and Competitive Sealed Tenders. Journal of Finance, 16(1): 8-37. Bergemann, Dirk and Juuso Valimaki (2010): The Dynamic Pivot Mechanism. Econometrica, 78: 771-789. Ausubel, Larry and Paul Milgrom (2005): The Lovely but Lonely Vickrey Auction. in Cramton et. al Combinatorial Auctions, 2005. Rothkopf, Michael, Thomas Tesiberg and Edward Kahn (1990): Why are Vickrey Auctions Rare? Journal of Political Economy, 98(1): 94-109. Jehiel, P. and B. Moldovanu (2001): Efficient Design with Interdependent Valuations. Econometrica, 69, 1237-1259. Bergemann, Dirk and J. Välimäki (2002): Information Acquisition and Efficient Mechanism Design. Econometrica, 70, 1007-1033. Gershkov, Alex and Benny Moldovanu (2009): Learning about the Future and Dynamic Efficiency. American Economic Review, 99(4), 1576-1587. 13. Bayesian Foundations Myerson, Roger and M. Satterthwaite (1983): Efficient Mechanisms for Bilateral Trading. Journal of Economic Theory, 29: 265-281. Hagerty, Kathleen and William P. Rogerson (1987): Robust Trading Mechanisms. Journal of Economic Theory, 42, 94-107. Cramton, Peter, Robert Gibbons, and Paul Klemperer (1987): Dissolving a Partnership Efficiently. Econometrica, 55(3): 615-632. 7

Segal, Ilya and Michael Whinston (2011): A Simple Status quo Ensures Participation (with Application to Efficient Bargaining). Theoretical Economics, 109-125. Gresik, Tom, and Mark Satterthwaite (1989): The Rate of Which a Simple Market Becomes Efficient as the Number of Traders Increases: An Asymptotic Result for Optimal Trading Mechanisms. Journal of Economic Theory, 48, 304-332. Rustichini, Aldo, Mark A. Satterthwaite and Steven R. Williams (1994): Convergence to Efficiency in a Simple Market with Incomplete Information. Econometrica, 62, 1041-1063. Satterthwaite, Mark (2001): Strategy-proofness and markets. Social Choice and Welfare 18: 37-58. Satterthwaite, Mark A. and Steven R. Williams (2002): The Optimality of a Simple Market Mechanism. Econometrica 70(5): 1841-1864. Cripps, Martin and Jeroen Swinkels (2006): Efficiency of Large Double Auctions Econometrica, 74 [1], 47-92. Wilson, Robert (1985): Incentive Efficiency of Double Auctions. Econometrica, 53: 1101-1116. Fieseler, K. T. Kittsteiner, and B. Moldovanu (2003): Partnership, Lemons, and Efficient Trade. Journal of Economic Theory, 113, 223-234. d Aspremont, C. and L. Gerard-Varet (1979): Incentives and Incomplete Information. Journal of Public Economics, 11: 24-45. Athey, Susan and Ilya Segal (2013): An Efficient Dynamic Mechanism. forthcoming, Econometrica McLean, Richard, and Andrew Postlewaite (2002): Informational Size and Incentive Compatibility. Econometrica 70, 2421-2454. Yamashita, Takuo (2013): Robust Trading Mechanisms to Strategic Uncertainty. Working paper, Toulouse. 14. Payoff and Revenue Equivalence Milgrom, Putting Auction Theory to Work, Chapter 4-5 Myerson, Roger (1981): Optimal Auction Design. Mathematics of Operations Research, 1981. Heydenreich, Birgit, Rudolf Muller, Rakesh Vohra, and Marc Uetz (2009): Characterization of Revenue Equivalence. Econometrica, 77, 307-316. Bulow, J. and J. Roberts (1989): The Simple Economics of Optimal Auctions. Journal of Political Economy, 97(5): 1060-1090. Klemperer, Paul (2003): Why Every Economist Should Learn Some Auction Theory. Advances in Economics and Econometrics: Invited Lectures to the 8th World Congress of the Econometric Society, M. Dewatripont, L. Hansen, and S. Turnovsky (eds), Cambridge University Press. Robert G. Hansen (1985): Auctions with Contingent Payments. American Economic Review, 75(4): 862-865. 8

DeMarzo, Peter, Ilan Kremer, and Andrzej Skrzypacz (2005): Bidding with Securities: Auctions and Security Design. American Economic Review, 95(4): 936-959. Milgrom, P. and R. Weber (1982): A Theory of Auctions and Competitive Bidding. Econometrica, 50: 1089-1122. 15. Noteworthy Auction Results McAfee, R.P. and J. McMillan (1987): Auctions and Bidding. Journal of Economic Literature, XXV, 699-738. Levin, Dan and James L. Smith (1994): Equilibrium in Auctions with Entry. American Economic Review, 84 (3): 585-599. Bulow, Jeremy and Paul Klemperer (2009): Why Do Sellers (Usually) Prefer Auctions? American Economic Review, 99(4): 1544-1575. McAfee, R. Preston and John McMillan (1992): Bidding Rings. American Economic Review, 82 (3), 579-99. Asker, John (2010): A Study of the Internal Organisation of a Bidding Cartel. American Economic Review, 100(3): 724-762. Bulow, Jeremy and Paul Klemperer (1996): Auctions versus Negotiations. American Economic Review, 86(1): 180-94. Armstrong, M. (2000): Optimal Multi-Object Auctions. Review of Economic Studies, 67, 455-481. Milgrom, Paul R. and Robert J. Weber (1982): The Value of Information in a Sealed-Bid Auction. Journal of Mathematical Economics, 10(1): 105-14. 16. Online Markets Roth, A. E. and A. Ockenfels (2002): Late-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from ebay and Amazon. American Economic Review, 92(4): 1093-1103. Ely, Jeff and Tanjim Hossain (2009): Sniping and Squatting in Auction Markets. American Economic Journal: Microeconomics, 1(2): 68-94. Demange, Gabrielle, David Gale, and Marilda Sotomayor. 1986. Multi-Item Auctions. Journal of Political Economy, 94: 863-872. Edelman, B., M. Ostrovsky, and M. Schwarz (2007): Internet Advertising and the Generalized Second Price Auction: Selling Billions of Dollars of Keywords. American Economic Review, 97(1): 242-259. Levin, Jonathan (2013): The Economics of Internet Markets. Advances in Economics and Econometrics, Edited by D. Acemoglu, M. Arellano and E. Dekel. Einav, Liran, Chiara Farronato, Jonathan Levin, and Neel Sundaresan (2013): Sales Mechanisms in Online Markets: What Happened to Internet Auctions? Working paper, Stanford University 17. Information Interdependencies and Aggregation 9

Cremer, Jacques and Richard McLean (1985): Optimal Selling Strategies under Uncertainty for a Discriminating Monopolist when Demands are Interdependent. Econometrica, 53 (2): Cremer, Jacques and Richard McLean (1988): Full Extraction of the Surplus in Bayesian and Dominant Strategy Auctions. Econometrica, 56(6): 1247-1257. McAfee, R. Preston and Phil Reny (1992): Correlated Information and Mechanism Design. Econometrica, 60 (2): 395-421. Milgrom, Paul (1979): A Convergence Theorem for Competitive Bidding with Differential Information. Econometrica, 47, 679-688. Kremer, I. (2002): Information Aggregation in Common Value Auctions. Econometrica, 70, 1675-1682. Persico, N. (2000): Information Acquisition in Auctions. Studies, 71(1): 165-194. Review of Economic Pesendorfer, W. and J. Swinkels (1997): The Loser s Curse and Information Acquisition in Common Value Auctions. Econometrica, 65: 1247-1281. Pesendorfer W., and J. Swinkels (2000): Efficiency and Information Aggregation in Auctions. American Economic Review, 90: 499-425. Atakan, Alp., and Mehmet Ekmeki (2014): Auctions, Actions, and the Failure of Information Aggregation. American Economic Review, forthcoming. Jackson, Matthew and Ilan Kremer (2006): The Relevance of a Choice of Auction Format in a Competitive Environment. Review of Economic Studies, 73(4): 961-981. 18. Multi Unit Auctions Krishna, Vijay. Auction Theory. Second Edition. Academic Press. Wilson, Robert (1979): Auctions of Shares. Quarterly Journal of Economics, 93:675-689. Back, Kerry and and J. Zender (1993): Auctions of Divisible Goods: On the Rationale for the Treasury Experiment. Review of Financial Studies, 6: 733-764. Nyborg, K., K. Rydqvist, and S. Sundaresan (2002): Bidder Behavior in Multiunit Auctions: Evidence from Swedish Treasury Auctions. Journal of Political Economy, 110: 394-424. Kremer, Ilan and Kjell Nyborg (2004): Divisible Good Auctions: The Role of Allocation Rules. Rand Journal of Economics, 35(1): 147-159. 19. Package and Combinatorial Auctions Bernheim, B. Douglas and Whinston, Michael (1986): Menu Auctions, Resource Allocation, and Economic Influence. Quarterly Journal of Economics, 101(1): 1-32. Milgrom, P. (2000): Putting Auction Theory to Work: The Simultaneous Ascending Auction. Journal of Political Economy, 108(2): 245-272. 10

Dasgupta, P. and E. Maskin (2000): Efficient Auctions. Economics, 115: 341-388. 20. Resale Quarterly Journal of Ausubel, L. and P. Milgrom (2002): Ascending Auctions with Package Bidding, B.E. Press, 1(1). Lehmann, Daniel, Liadan O Callaghan, and Yoav Shoham (2002): Truthful Revelation in Approximately Efficient Combinatorial Auctions. Journal of the ACM, 49(5): 577-602. Day, Robert and Paul Milgrom (2008): Core-Selecting Package Auctions. International Journal of Game Theory Milgrom, Paul and Ilya Segal (2013): Deferred-Acceptance Auctions. paper, Stanford University. Jehiel, P., B. Moldovanu, and E. Stacchetti (1996): Weapons. American Economic Review, 86: 814-829. Working How (not) to Sell Nuclear Jehiel, P. and B. Moldovanu (1999): Resale Markets and the Assignment of Property Rights. Review of Economic Studies, 66: 971-991. Krishna, Vijay and Isa Halafir (2009): Asymmetric Auctions with Resale. American Economic Review, 98(1): 87-112. Haile, P., (2001: Auctions with Resale Markets: An Application to U.S. Forest Service Timber Sales. American Economic Review, 92(3), 399-427. Jehiel, P. and Armando Gomes (2005): Dynamic Processes of Social and Economic Interactions: On the Persistence of Inefficiencies. Journal of Political Economy, 113(3): 626-667. Zheng, Charles (2002): Optimal Auctions with Resale. Econometrica, 70: 2197-2224. Garratt, Rodney, and Thomas Tröger (2006): Speculation in Standard Auctions with Resale. Econometrica, 74: 753-769. Garratt, Rodney, Thomas Tröger, and Charles Zheng (2009): Collusion via Resale. Econometrica, 77(4): 1095-1136. 21. Simplicity and Limited Rationality Harrison, Glenn (1989): Theory and Misbehavior in First-Price Auctions. American Economic Review, 79, 749-762. Roth, Alvin and Uriel G. Rothblum (1999): Truncation strategies in matching markets - in search of advice for participants. Econometrica, 67, 21-43. Dasgupta, Partha and Eric Maskin (2009): On the Robustness of Majority Rule. Journal of the European Economic Association, 6(5): 949-973. Milgrom, Paul (2009): Assignment Messages and Exchanges. American Economic Journal: Microeconomics, 1:2, 95-113. Milgrom, Paul (2010): Simplified Mechanism Design with an Application to Sponsored Search Auctions. Games and Economic Behavior, 70(1): 62-70. 11

Segal, Ilya (2006): Communication in Economic Mechanisms, in Advances in Economics and Econometrics: Theory and Application, Ninth World Congress (Econometric Society Monographs), ed. by Richard Blundell, Whitney K. Newey, and Torsten Persson, Cambridge University Press. Eyster, Erik and Matthew Rabin (2005): Cursed Equilibrium. Econometrica, 73(5), 1623-1672. Crawford, Vince and Nagore Iriberri (2007): Level-k Auctions: Can a Nonequilibrium Model of Strategic Thinking Explain the Winner s Curse and Overbidding in Private-Value Auctions? Econometrica, 75(6): 1721-1770. Fudenberg, Drew and David Levine (1993): Self-Confirming Equilibrium. Econometrica, 61(3), 523-545. Esponda, Ignacio (2009): Information Feedback in First Price Auctions. Journal of Economics, 39: 491-508. Rand Bergemann, D. and Stephen Morris (2007): An Ascending Auction for Interdependent Values: Uniqueness and Robustness to Strategy Uncertainty. American Economic Review, P & P, 97, 125-130. Chung, Kim-Sau and Jeff Ely (2007): Foundations of Dominant Strategy Mechanisms. Review of Economic Studies, 74, 447-476. 22. Financial Markets Pagano, Marco and Ailsa Roell (1996): Transparency and Liquidity: A Comparison of Auction and Dealer Markets with Informed Trading. Journal of Finance, 51(2): 579-611. Asquith, Paul, Thomas Covert, and Parag Pathak (2013): The Effects of Mandatory in Financial Market Design: Evidence from Corporate Bond Market. NBER Working Paper 19417. Athanasoulis, Stefano and Robert Shiller (2001): World Income Components: Measuring and Exploiting Risk Sharing Opportunities. American Economic Review, 91(4): 1031-1054. Athanasoulis, Stefano and Robert Shiller (2000): The Significance of the Market Portfolio. Review of Financial Studies, 13(2): 301-329. Acharya, Viral and Alberto Bisin (2014): Centralized vs. Over the Counter Markets. Journal of Economic Theory, 149, 153-182. Duffie, Darrell, Nicolae Garleanu, and Lasse Pedersen (2005): Over the Counter Markets. Econometrica, 73: 1815-1847. Glosten, Lawrence and Paul R. Milgrom (1985): Bid, ask, and transaction prices in a specialist market with heterogenously informed traders. Journal of Financial Economics, 14(1): 71-100. Kyle, Pete (1985): Continuous Auctions and Insider Trading. Econometrica, 53(6): 1315-1335. Zhu, Haoxiang (2013): Do Dark Pools Harm Price Discovery? Review of Financial Studies, forthcoming 12

Fuchs, Willie and Andy Skrypacz (2013): The Costs and Benefits of Dynamic Trading in a Lemons Market. Working paper, Stanford University. Budish, Eric, Peter Cramton, and John Shim (2013): The High-Frequency Trading Arms Race: Frequent Batch Auctions as a Market Design Response. Working paper, University of Chicago. Ait-Sahalia, Yacine and Mehmet Saglam (2013): High Frequency Traders: Taking Advantage of Speed. NBER Working Paper 19531. 23. Computer Science-Inspired Approaches, TBD Hartline, Jason (2012): Approximation in Economic Design, Unpublished notes. Segal, Ilya (2003): Optimal Pricing Mechanisms with Unknown Demand. American Economic Review, 93(3), 509-529. 13