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The Parable of the Auctioneer: Complexity in Paul R. Milgrom’sDiscovering Prices

Scott Duke Kominers¹; Alexander Teytelboym²

¹ Entrepreneurial Management Unit, Harvard Business School, Department of Economics and Center of Mathematical Sciences and Applications, Harvard University, and National Bureau of Economic Research. · ² Department of Economics, Institute for New Economic Thinking at the Oxford Martin School, and St.  Catherine’s College, University of Oxford.

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. (JEL D43, D44, D47, L96, L98)

DOI

10.1257/jel.20191504

Volume

58 (4)

Pages

1180-1196

Language

en

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