Rent Auctions

Synopsis

Although it is among the oldest of market institutions, the auction is
ubiquitous in today's economy, used for everything from government procurement to
selling advertising on the Internet to course assignment at MIT's Sloan School. And
yet beyond the small number of economists who specialize in the subject, few people
understand how auctions really work. This concise, accessible, and engaging book
explains both the theory and the practice of auctions. It describes the main auction
formats and pricing rules, develops a simple model to explain bidder behavior, and
provides a range of real-world examples.

The authors explain what
constitutes an auction and how auctions can be modeled as games of asymmetric
information -- that is, games in which some players know something that other
players do not. They characterize behavior in these strategic situations and
maintain a focus on the real world by illustrating their discussions with examples
that include not just auctions held by eBay and Sotheby's, but those used by Google,
the U.S. Treasury, TaskRabbit, and charities. Readers will begin to understand how
economists model auctions and how the rules of the auction shape bidder incentives.
They will appreciate the role auctions play in our modern economy and understand why
these selling mechanisms are so resilient.

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