Applied Mechanism Design

Duke University, Durham NC

Investigators

Abstract

This award funds research using computational methods on a problem in mechanism design that is especially important in understanding the likely outcomes of complicated auctions. The research team use mechanism design theory and linear programming techniques to consider whether first-price auctions are more or less vulnerable to collusion than second-price or ascending bid auctions. They also determine how a tacit or explicit cartel might operate in a variety of different kinds of auctions. The research has substantial broader impacts because auction methods are widly used. The Federal government currently uses auctions to allocate telecommunications spectrum and rights to offshore drilling, timber, and mining. Proposals to use a 'cap and trade' system to reduce greenhouse gas emissions also rely on auction methods.