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General equilibrium methodology applied to the design, implementation and performance evaluation of large, multi-market and multi-unit policy constrained auctions

Author

Listed:
  • Charles R. Plott

    (California Institute of Technology)

  • Timothy N. Cason

    (Purdue University)

  • Benjamin J. Gillen

    (Claremont McKenna College)

  • Hsingyang Lee

    (California Institute of Technology)

  • Travis Maron

    (California Institute of Technology)

Abstract

The paper reports on the methodology, experiments, design and outcome of a large auction with multiple, interdependent markets constructed from principles of general equilibrium as opposed to game theoretic auction theory. The auction distributed 18,788 entitlements to operate electronic gaming machines in 176 interconnected markets to 363 potential buyers representing gaming establishments subject to multiple policy constraints on the allocation. The multi-round auction, conducted in one day, produced over $600M in revenue. All policy constraints were satisfied. Revealed dynamics of interim allocations and new statistical tests provide evidence of multiple market convergence hypothesized by classical principles and theories of general equilibrium. Results support the use of computer supported, “tâtonnement–like” market adjustments as a reliable empirical processes and not as purely theoretical constructs.

Suggested Citation

  • Charles R. Plott & Timothy N. Cason & Benjamin J. Gillen & Hsingyang Lee & Travis Maron, 2023. "General equilibrium methodology applied to the design, implementation and performance evaluation of large, multi-market and multi-unit policy constrained auctions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 75(3), pages 641-693, April.
    • Handle: RePEc:spr:joecth:v:75:y:2023:i:3:d:10.1007_s00199-022-01431-7
    DOI: 10.1007/s00199-022-01431-7
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    More about this item

    Keywords

    Auction design; Testbed experiments; Stability;
    All these keywords.

    JEL classification:

    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design

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