Economics 980: Market Design Junior Seminar (Fall 2007)

Reading List

Note: this reading list will be updated throughout the semester so check back prior to each lecture. Reading assignments will be posted separately. Not all of these readings will be assigned for class; many are background or are advanced reading for the interested student.

Part I: Auctions

I.AAuction Theory

I.A.1Single Unit Auctions

• Klemperer, Paul. 2002. “What Really Matters in Auction Design?” Journal of Economic Perspectives, 16(1), 169-189.
• Klemperer, Paul. 1998. “Auctions with Almost Common Values: The ‘Wallet Game’ and its Applications.” European Economic Review, 42(3-5), 757-769.
• McAfee, R.Preston and John McMillan. 1987. “Auctions and Bidding.” Journal of Economic Literature, 25, 699-738. [presentation]
• Perry, Motty, Elmar Wolfstetter, and Shmuel Zamir. 2000. “A Sealed-Bid Auction That Matches the English Auction.” Games and Economic Behavior, 33(2), 265-73.

I.A.1Multi-Unit Auctions

• Ausubel, Lawrence M., Peter Cramton, and Paul Milgrom. 2006. “The Clock-Proxy Auction: A Practical Combinatorial Auction Design,” in Peter Cramton, Yoav Shoham, and Richard Steinberg (eds.), Combinatorial Auctions, Chapter 5, MIT Press, 2006.
• Ausubel, Lawrence M. and Peter Cramton. 2004. “Auctioning Many Divisible Goods,” Journal of the European Economic Association, 2, 480-493.
• Ausubel, Lawrence M. and Peter Cramton. 2002. “Demand Reduction and Inefficiency in Multi-Unit Auctions.” Working Paper, University of Maryland.
• Ausubel, Lawrence M. and Paul Milgrom. 2002. “Ascending Auctions with Package Bidding.” Frontiers of Theoretical Economics, 1(1), Article 1.
• Ausubel, Lawrence M. and Peter Cramton. 1999. “The Optimality of Being Efficient.” Working Paper, University of Maryland.
• Cramton, Peter. 1998. “Ascending Auctions.” European Economic Review, 42, 745-756.

I.B Designing Auction Markets: Applications

I.B.1 Timber

• The Canada-United States Softwood Lumber Trade Discussions. 2001. Province of British Columbia.
• Athey, Susan, Jonathan Levin, and Enrique Seira. 2011. “Comparing Open and Sealed Bid Auctions: Theory and Evidence from Timber Auctions.” Quarterly Journal of Economics, vol. 126(1), 207-257.
• Athey,Susan, Peter Cramton, and Allan Ingraham. 2002. “Auction-Based Timber Pricing and Complementary Market Reforms in British Columbia.” Market Design, Inc. and Criterion Auctions.
• Athey, Susan and Jonathan Levin. 2001. “Information and Competition in U.S. Forest Service Timber Auctions.” The Journal of Political Economy. 109(2), 375-417.

I.B.2 Spectrum

• Ausubel, Lawrence M., Peter Cramton, R. Preston McAfee, and John McMillan. 1997. “Synergies in Wireless Telephony: Evidence from the Broadband PCS Auctions.” Journal of Economics and Management Strategy, 6(3), 497-527.
• Borgers, Tilmanand Christian Dustmann. 2002. “Rationalizing the UMTS Spectrum Bids: The Case of the UK Auction.” Working Paper, University College London.
• Cramton, Peter and Jesse Schwartz. 2003. “Collusive Bidding in the FCC Spectrum Auctions.” Contributions to Economic Analysis & Policy, 1(1). [presentation]
• *Cramton, Peter. 2002. “Spectrum Auctions,” in Martin Cave, Sumit Majumdar, and Ingo Vogelsang, eds., Handbook of Telecommunications Economics, Amsterdam: Elsevier Science B.V., Chapter 14, 605-639.
• Cramton, Peter. 2000. “Lessons from the United States Spectrum Auctions.” Prepared Testimony of Peter Cramton before the United States Senate Budget Committee.
• Cramton, Peter, Evan Kwerel, and John Williams. 1998. “Efficient Relocation of Spectrum Incumbents.” Journal of Law and Economics, 41, 647-675.
• Cramton, Peter. 1997. “The FCC Spectrum Auctions: An Early Assessment.” Journal of Economics and Management Strategy, 6(3), 431-495.
• Jehiel, Philippe and Benny Moldovanu. 2001. “The European UMTS/IMT-2000 License Auctions.” Working Paper, University of Mannheim.
• Milgrom, Paul. 1996. “Procuring Universal Service: Putting Auction Theory to Work.” Lecture at the Royal Swedish Academy of Sciences.

I.B.3 Airport Landing Slots

• Ausubel, Lawrence M. and Peter Cramton. 2005. “Mock Auction of Arrival/Departure Slots at LaGuardia Airport.” University of Maryland.

I.B.4 Electricity

• Borenstein, Severin, James Bushnell, and Frank Wolak. 2002. “Measuring Market Inefficiencies in California’s Restructured Wholesale Electricity Market.” American Economic Review, 92(5), 1376-1405.
• Cramton, Peter and Steven Stoft. 2006. “The Convergence of Market Designs for Adequate Generating Capacity.” Working Paper, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
• Kahn, Alfred E., Peter Cramton, Robert H. Porter, and Richard D. Tabors. 2001. “Pricing in the California Power Exchange Electricity Market: Should California Switch from Uniform Pricing to Pay-as-Bid Pricing?” Blue Ribbon Panel Report, California Power Exchange.
• Wilson, Robert. 1999. “Market Architecture.” Stanford University.
• Wolak, Frank A. 2001. “What Went Wrong in California’s Restructured Electricity Market?” Presentation at the AEI.

I.B.5 Pollution Permits

• Cramton, Peter andSuzi Kerr. 2002. “Tradeable Carbon Permit Auctions: How and Why to Auction Not Grandfather.” Energy Policy, 30, 333-345.
• Ellerman, A.Denny, Richard Schmalensee, Paul L. Joskow, Juan Pablo Montero, and Elizabeth M. Brady. DATE? “Emissions Trading Under the U.S.Acid Rain Program: Evaluation of Compliance Costs and Allowance Market Performance.” Center for Energy and Environmental Policy Research, Massachusetts Institute of Technology.

I.B.6 Treasury Bills

• Bikhchandani, Sushil and Chi-Fu Huang. 1993. “The Economics of Treasury Securities Markets.” Journal of Economic Perspectives, 7(3), 117-134.
• Malvey, Paul F., Christina M. Archibald, and Sean T. Flynn. 1998. “Uniform-Price Auctions: Evaluation of the Treasury Experience.”
• Malvey, Paul F., Christina M. Archibald. 1998. “Uniform-Price Auctions: Update of the Treasury Experience.” Office of Market Finance, U.S. Treasury.

I.B.7 Bus Routes and Combinatorial Auctions

• Cantillon, Estelle and Martin Pesendorfer. 2007. “Combination Bidding in Multi-Unit Auctions.” Mimeo, Centre for Economic Policy Research, LSE.
• Cantillon Estelle and Martin Pesendorfer. 2004. “Auctioning Bus Routes:TheLondon Experience,” later published as Chapter 22 in Combinatorial Auctions, Cramton, Shoham and Steinberg (eds), MIT Press. 2006.

I.C Online Auctions

I.C.1 eBay

• Ariely, Dan, Axel Ockenfels, and Alvin E. Roth. 2005. “An Experimental Analysis of Ending Rules in Internet Auctions.” RAND Journal of Economics, 36(4), 891-908.
• Bajari, Patrick and Ali Hortacsu. 2004. “Economic Insights from Internet Auctions.” Journal of Economic Literature, 42, 457-486.
• Bajari, Patrick and Ali Hortacsu. 2002. “Cyberspace Auctions and Pricing Issues: A Survey of Empirical Findings.” Published in The New Economy Handbook. Derek C. Jones, ed. 2003.
• Bajari, Patrick and Ali Hortacsu. 2003. “The Winner’s Curse, Reserve Prices, and Endogenous Entry: Empirical Insights from eBay Auctions.” RAND Journal of Economics, 34(2), 329-355.
• Hortacsu, Ali, Asis Martinez-Jerez and Jason Douglas. 2006. “The Geography Trade on eBay andMercadoLibre.” NET Institute Working Paper #06-09.
• Roth, Alvin E. and Axel Ockenfels. 2002. “Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet.” American Economic Review, 92(4), 1093-1103. (See Hal Varian’s NY Times column on this work here).

I.C.2 Online Auctions: Auctions for Sponsored Links

• Athey, Susan and Glenn Ellison. 2011. “Position Auctions with Consumer Search.” Quarterly Journal of Economics, vol. 126(3), 1213-1270
• Borgers, Tilman, Ingemar Cox, Martin Pesendorfer, and Vaclav Petricek. 2006. “Equilibrium Bids in Sponsored Search Auctions: Theory and Evidence.” Working Paper, LSE.
• Edelman, Benjamin, Ostrovsky, Michael, and Schwartz, Michael. 2007. “Internet Advertising and the Generalized Second Price Auction: Selling Billions of Dollars Worth of Keywords.” American Economic Review, 97(1), 242-259.
• Varian, Hal R. 2006. “Position Auctions.” Mimeo, UC Berkeley.

Part II: Two-Sided Markets

• Ambrus, Atilla and Rosella Argenziano. 2009. “Asymmetric Networks in Two- sided Markets.” American Economic Journal: Microeconomics, 1(1): 17-52.
• Armstrong, Mark. 2006. “Competition in Two-Sided Markets.” RAND Journal of Economics, 37(3), 668-691.
• Armstrong, Mark and Julian Wright. 2006. “Two-Sided Markets, Competitive Bottlenecks, and Exclusive Contracts.” Economic Theory, 32(2), 353-380.
• Caillaud, Bernard and Bruno Jullien. 2003. “Chicken and Egg: Competition Among Intermediation Service Providers.” RAND Journal of Economics, 34(2), 309-328.
• Ellison, Glen, Drew Fudenberg, and Markus Mobius. 2004. “Competing Auctions.” Journal of the European Economic Association, 2(1), 30-66.
• Evans, David S. 2003. “The Antitrust Economics of Multi-Sided Platform Markets.” Yale Journal on Regulation, 20, 325-382.
• Hagiu, Andrei. 2006. “Pricing and Commitment by Two-Sided Platforms.” RAND Journal of Economics, 37(3), 720-737.

II.A Dating Markets

• Fisman, Raymond, Sheena Iyengar, Emir Kamenica, and Itamar Simonson. 2006. “Gender Differences in Mate Selection: Evidence from a Speed Dating Experiment.” Quarterly Journal of Economics, 121(2), 673-697.
• Fisman, Raymond, Sheena S. Iyengar, Emir Kamenica, Itamar Simonson. 2005. “Searching For a Mate: Evidence From a Speed Dating Experiment.” Working Paper, Columbia University.
• Fisman, Raymond, Sheena Iyengar, Emir Kamenica, & Itamar Simonson. DATE? “Racial Preferences in Dating.” Review of Economic Studies, 2007, forthcoming.
• Hortacsu, Ali, Guenter Hitsch and Dan Ariely. 2006. “What Makes You Click?Mate Preferences and Matching Outcomes in Online Dating.” MIT Sloan Research Paper #4603-06. Link to Hal Varian’s NY Times column on this paper.

II.B Media Markets

• Anderson, Simon and Stephen Coate. 2005. “Market Provision of Broadcasting: A Welfare Analysis.” Review of Economic Studies, 72(253), 947-952.

Part III: Matching Markets

III.A Introduction and Theory

• Gale, David and Lloyd Shapley. 1962. “College Admissions and the Stability of Marriage.” American Mathematical Monthly, 69, 9-15.
• Roth, Alvin E. 2002. “The Economist as Engineer: Game Theory, Experimental Economics and Computation as Tools of Design Economics.” Econometrica, 70(4), 1341-1378.
• Roth, Alvin E. and M. Sotomayor. 1990. Two-Sided Matching: A Study in Game-Theoretic Modeling and Analysis, Econometric Society Monograph Series, Cambridge University Press (Chapters 2-4).
• Roth, Alvin E. 1984. “The Evolution of the Labor Market for Medical Interns and Residents: A Case Study inGame Theory.” Journal of Political Economy, 92, 991-1016.

III.B Labor Markets

III.B.1 National Resident Matching Program

• Bulow, Jeremy and Jonathan D. Levin. 2006. “Matching and Price Competition.” American Economic Review, 96(3), 652-658.
• Frechette, Guillaume, Alvin E. Roth, and M. Utku Unver. 2007. “Unraveling Yields InefficientMatchings: Evidence from Post-Season College Football Bowls,” The RAND journal of economics, 38(4), 967-982.
• Niederle, Muriel and Alvin E. Roth, 2003. “Unraveling Reduces the Scope of an Entry Level Labor Market: Gastroenterology With and Without a Centralized Match.” Journal of Political Economy, 111(6), 1342-1352.
• Niederle, Muriel, and Alvin E. Roth, “Relationship Between Wages and Presence of a Match in Medical Fellowships,” JAMA, Journal of the American Medical Association, vol. 290, No. 9, September 3, 2003, 1153-1154.
• Niederle, Muriel, and Alvin E. Roth, “Effect of a Match on Salaries for Medical Fellows’ Reply,” JAMA, Journal of the American Medical Association, vol. 290, No. 18, November 12, 2003, 2408.
• Niederle, Muriel, Competitive Wages in a Match with Ordered Contracts, forthcoming, American Economic Review.
• Roth, A. E., and M. Sotomayor. Two-Sided Matching: A Study in Game-Theoretic Modeling and Analysis. Cambridge University Press, 1992, paperback ed. Chapter 5.
• Roth, Alvin E. and Elliott Peranson. 1999. “The Redesign of the Matching Market for American Physicians: Some Engineering Aspects of Economic Design.” American Economic Review, 89(4), 748-780.
• Roth, Alvin E. and Xiaolin Xing. 1994. “Jumping the Gun: Imperfections and Institutions Related to the Timing of Market Transactions.” American Economic Review, 84, 992-1044.
• 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(3), 415-440.
• Roth, Alvin E. 1990. “New Physicians: A Natural Experiment in Market Organization.” Science, 250, 1524-1528.

III.B.2 Law Clerks

• Avery, Christopher, Christine Jolls, Richard A. Posner, and Alvin E. Roth. 2001. “The Market for Federal Judicial Law Clerks.” University of Chicago Law Review, 68(3), Summer, 793-902.
• Haruvy, Ernan, Alvin E. Roth, and M. Utku Unver. 2006. “The Dynamics of Law Clerk Matching: An Experimental and Computational Investigation of Proposals for Reform of the Market.” Journal of Economic Dynamics and Control, 30(3), 457-486.

III.CSchool Choice

• Abdulkadiroglu, Atila, Parag A. Pathak, and Alvin E. Roth. 2006. “Strategy-proofness versus Efficiency in Matching with Indifferences: Redesigning the NYC High School Match.” Harvard University.
• Abdulkadiroglu, Atila, Parag A. Pathak, Alvin E. Roth, and Tayfun Sonmez. 2006. “Changing the Boston School Choice Mechanism.” Working Paper, Boston College.
• Abdulkadiroglu, Atila, Parag A. Pathak, and Alvin E. Roth. 2005. “The New York City High School Match.” American Economic Review, Papers and Proceedings, 95(2), 364-367.
• Abdulkadiroglu, Atila, and Tayfun Sonmez. “School Choice: A Mechanism Design Approach.” 2003. American Economic Review93-3: 729-747, June.
• Erdil, Aytek and Haluk Ergin. What’s the matter with tie-breaking? (Improving efficiency in school choice), forthcoming, AER.

III.D Kidney Exchange

• Allen, Scott. 2004. Cross-Donor System Planned for Region’s Kidney Patients. The Boston Globe.
• Roth, Alvin E. 2006. “Repugnance as a Constraint on Markets.” NBER Working Paper #12702, and forthcoming in the Journal of Economic Perspectives.
• Roth, Alvin E., Tayfun Sonmez, and M. Utku Unver. 2005. “A Kidney Exchange Clearinghouse in New England.” American Economic Review, Papers and Proceedings, 95(2), 376-380.
• Roth, Alvin E., Tayfun Sonmez, and M. Utku Unver. 2005. “Efficient Kidney Exchange: Coincidence of Wants in a Market with Compatibility-Based Preferences,” (May, 2005. NBER Paper w11402), American Economic Review. (And here is the online appendix with some of the proofs).
• Roth, Alvin E., Tayfun Sonmez, and M. Utku Unver. 2005. “Pairwise Kidney Exchange.” Journal of Economic Theory, 125(2), 151-188. (Originally published as NBER Paper w10698, August 2004.)
• Roth, Alvin E., Tayfun Sonmez, and M. Utku Unver. 2004. “Kidney Exchange,” Quarterly Journal of Economics, 119(2), May, 457-488.

Part IV: Markets for Health Care Insurance

IV. A Theory

• Cutler, David M. and Richard Zeckhauser. 1999. “The Anatomy of Health Insurance.” NBER Working Paper7176. Also published in The Handbook of Health Economics. Culter and Newhouse, eds. Elsevier. 2000.
• Cutler, David M. and Sarah J. Reber. 1998. “Paying for Health Insurance: The Trade-off Between Competition and Adverse Selection.” Quarterly Journal of Economics, 113(2), May, 433-466.
• Newhouse, Joseph P. 1996. “Reimbursing Health Plans and Providers: Efficiency in Production Versus Selection.”  Journal of Economic Literature.

IV.B Hospital Networks and Insurance

• Ho, Katherine. 2007. “Insurer-Provider Networks in the Medical Care Market.” Working Paper, Columbia University.
• Ho, Katherine. 2006. “The Welfare Effects of Restricted Hospital Choice in the U.S. Medical Care Market.” Journal of Applied Econometrics, 21(7), 1039-1079.

IV.C Information Provision

• Dafny, Leemore and David Dranove. 2005. “Do Report Cards Tell Consumers Anything They Don’t Already Know? The Case of Medicare HMOs,” NBER WP11420.
• Dranove, David, Daniel Kessler, Mark McClellan, and Mark Satterthwaite. 2003. “Is More Information Better? The Effects of ‘ReportCards’ on Health Care Providers.” Journal of Political Economy, 111, 555-588.

Part V: Market Design Resources on the Internet

V.A Web Sites with Additional Information

Al Roth’s market design page

Bob Wilson’s Market Design Class at Stanford GSB

David Parkes teaches a class on market design from a computer science perspective at Harvard

Peter Cramton’s market design class at Maryland

V.B Project Ideas

Ideas from Al Roth’s Course

Ideas from Peter Cramton’s course