The Parable of the Auctioneer: Complexity in Paul R. Milgrom's Discovering Prices
- (pp. 1180-96)
Abstract
Designing marketplaces in complex settings requires both novel economic theory and real-world engineering, often drawing upon ideas from fields such as computer science and operations research. In Discovering Prices: Auction Design in Markets with Complex Constraints, Milgrom (2017) explains the theory and design of the United States' "incentive auction" that reallocated wireless spectrum licenses from television broadcasters to telecoms. Milgrom's account teaches us how economic designers can grapple with complexity both in theory and in practice. Along the way, we come to understand several different types of complexity that can arise in marketplace design.Citation
Kominers, Scott Duke, and Alexander Teytelboym. 2020. "The Parable of the Auctioneer: Complexity in Paul R. Milgrom's Discovering Prices." Journal of Economic Literature, 58 (4): 1180-96. DOI: 10.1257/jel.20191504Additional Materials
JEL Classification
- D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
- D44 Auctions
- D47 Market Design
- L96 Telecommunications
- L98 Industry Studies: Utilities and Transportation: Government Policy