AØKA08229U Auctions: Theory and Practice

Volume 2019/2020
Education

MSc programme in Economics – elective course

 

Content

Auctions are used for a wide variety of economic transactions. They are used to allocate pollution permits, to sell concert tickets, and to put a price tag on consumer goods such as electricity and pharmaceuticals. Auctions represent a pure form of market interaction, which means that the insights drawn from this field are readily applicable to more general economic concepts. In this course, we will take a closer look at auction theory and its practical applications.

 

We will first cover standard auction theory related to single-unit auctions, such as various simple auction formats, concepts such as the winner’s curse, the revenue equivalence theorem, etc.

 

We will then move on to more complex topics, such as multi-unit and multi-object auction formats and the specific complications associated with allocating multiple goods (such as substitutability/complementarity and exposure risk) as well as specific issues related to repeated auctions.

 

During the course, we will incorporate considerations on how to design auctions subject to certain policy objectives, such as those related to competition economics, including the avoidance of collusion and the facilitation of sustainable long-term allocations, etc. Specific auction design features covered during the course will include concepts such as reserve prices, package bidding, information rules, and switching and activity rules.

 

Throughout the course, we will place considerable emphasis on incorporating specific cases, i.e. applications of auction theory in practice, in order to demonstrate theoretical concepts. These cases will cover auctions and tenders from a variety of fields and industries, including telecommunications, pharmaceuticals, electricity, IP addresses, etc.

Learning Outcome

After completing the course the student is expected to be able to:

 

Knowledge:

  • Identify auction formats and account for auctions in terms of theoretically relevant properties.
  • Identify and discus, analytically and practically, the behavior of various parties (both bidders and sellers) in an auction.
  • Define bid strategies for buyers in simple auction types and exploit the fundamental result regarding revenue equivalence in simple standard auctions
  • Account for fundamental concepts and complications associated with multi-object and multi-unit auctions as well as the extension of concepts from simple auctions to these contexts

 

Skills:

  • Analyze the problems associated with designing auctions subject to certain policy objectives, in particular in relation to competition economics.
  • Identify potential auction regulations that might address specific issues.
  • Apply and assess the auction theory to real-life auctions and to the specific cases covered in the course.

 

Competencies:

  • Manage the main issues related to the design and implementation of auctions in practice.

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Main textbooks:

  • Krishna, V. (2010). Auction theory. Amsterdam: Academic.
  • Klemperer, P. (2010). Auctions: Theory and practice. New Delhi: New Age International. (available for free online on the website of the author’s university)
  • A number of shorter texts and case documents will also be integrated into the curriculum.
It is recommended that students have followed Microeconomics III (at the study of Economics, University of Copenhagen) prior to taking the course, or are at least following Microeconomics III in parallel with the course.
Lectures.
Active participation from students is expected, in particular in conjunction with cases and practical applications. Several lectures will also include mock auctions.

During the semester a mandatory take-home assignment (midterm project) must be handed in and not later than the given deadline. The midterm project can be done in groups. Please be aware of the rules for co-writing assignments and that the plagiarism rules must be complied.
Schedule:
3 hours lectures a week from week 36 to 50 (except week 42).

Schema:
The overall schema for the Master can be seen at KUnet:
MSc in Economics => "Courses and teaching" => "Planning and overview" => "Your timetable"

Timetable and venue:
To see the time and location of lectures please press the link under "Se skema" (See schedule) at the right side of this page. E means Autumn.

You can find the similar information partly in English at
https:/​/​skema.ku.dk/​ku1920/​uk/​module.htm
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-E19; [Name of course]”
-Select Report Type: “List – Weekdays”
-Select Period: “Efterår/Autumn – Weeks 31-5”
Press: “ View Timetable”
  • Category
  • Hours
  • Exam
  • 12
  • Lectures
  • 42
  • Preparation
  • 152
  • Total
  • 206
Credit
7,5 ECTS
Type of assessment
Written assignment, 12 hours
individual take-home exam.
The exam assignment is given in English and must be answered in English.
The students are allowed to talk together about the given problem-set but must work on, write and upload the assignment answer individually. The plagiarism rules must be complied.
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Exam registration requirements

One mandatory assignment must be approved to be able to sit the exam.

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Aid
All aids allowed
Marking scale
7-point grading scale
Censorship form
No external censorship
for the written exam. The exam may be chosen for external censorship by random check.
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Exam period

The exam takes place:

15 January 2020 from 10 AM to 10 PM

 

Exam information:

Tnformation about the exam will be available in  the Digital Exam  from the middle of the semester.

 

In special cases, the exam date can be changed to another day and time within the exam period.

 

For enrolled students more information about examination, rules etc. is available at the intranet for Master students (UK) and Master students (DK).

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Re-exam

The reexam takes place:

24 February 2020 from 10 AM to 10 PM

 

NOTE: If only a few students have registered for the written re-exam, the reexam might change to an oral exam including the date, time and place for the exam, which will be informed by the Examination Office.

 

Reexam information:

Information about the reexam will be available in the Digital Exam  early February.

 

More information is available at  Master students (UK) and Master students (DK).  

 

Criteria for exam assesment

Students are assessed on the extent to which they master the learning outcome for the course.

 

To receive the top grade, the student must with no or only a few minor weaknesses be able to demonstrate an excellent performance displaying a high level of command of all aspects of the relevant material and can make use of the knowledge, skills and competencies listed in the learning outcomes.