Informationally Robust Approaches to Auction Theory

Ben Brooks is an Assistant Professor in the Department of Economics at the University of Chicago. He studies various aspects of economic theory, including games of incomplete information, auction theory and mechanism design, and repeated games.

Talk: Informationally Robust Approaches to Auction Theory

Abstract: Auctions are institutions for aggregating the private information held by economic agents to determine the allocation of goods and the terms of trade. They range from simple posted prices, to ascending bid "English" auctions, and to even more complex forms, such as the auctions for reallocating electromagnetic spectrum that were recently run by the US government. The key questions are: which auction formats will perform well in terms of some criterion, e.g., revenue or social welfare maximization? And, how does the relative ranking of auction formats depend on the form of bidders' private information? This talk presents an overview of game theoretic approaches to the analysis of auctions. Classical auction theory typically makes strong stylized assumptions about bidders' information about the value of the goods being traded. I survey a recent literature on informationally robust approaches to auction theory, in which these strong assumptions are relaxed and more general forms of information are considered. This leads to new empirical predictions for behavior in known auction formats, and it also leads to new auction designs whose performance is robust to misspecification of the bidders' information.