| NSF Org: |
SES Division of Social and Economic Sciences |
| Recipient: |
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| Initial Amendment Date: | September 1, 2020 |
| Latest Amendment Date: | October 15, 2020 |
| Award Number: | 1947514 |
| Award Instrument: | Standard Grant |
| Program Manager: |
Nancy Lutz
nlutz@nsf.gov (703)292-7280 SES Division of Social and Economic Sciences SBE Directorate for Social, Behavioral and Economic Sciences |
| Start Date: | September 1, 2020 |
| End Date: | August 31, 2024 (Estimated) |
| Total Intended Award Amount: | $277,000.00 |
| Total Awarded Amount to Date: | $277,000.00 |
| Funds Obligated to Date: |
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| History of Investigator: |
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| Recipient Sponsored Research Office: |
450 JANE STANFORD WAY STANFORD CA US 94305-2004 (650)723-2300 |
| Sponsor Congressional District: |
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| Primary Place of Performance: |
450 Serra Mall Stanford CA US 94305-2004 |
| Primary Place of
Performance Congressional District: |
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| Unique Entity Identifier (UEI): |
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| Parent UEI: |
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| NSF Program(s): | Strengthening American Infras. |
| Primary Program Source: |
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| Program Reference Code(s): |
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| Program Element Code(s): |
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| Award Agency Code: | 4900 |
| Fund Agency Code: | 4900 |
| Assistance Listing Number(s): | 47.075 |
ABSTRACT
This project will use economic theory and simulations to study, develop, and improve practically implementable auction designs for complex centralized markets. The project will contribute to our understanding of the effectiveness of auction designs that have been used in recent years to sell packages of radio spectrum, electrical power, internet advertising opportunities, and fishing rights. As our understanding of these kinds of markets has grown, we have come to understand that these market methods must be adjusted to simplify communication and computational complexity and allow for specific features such as economics of scale, very numerous differentiated goods, and exposure risks. This award funds research that will develop methods to evaluate and improve recent auction designs and to create entirely new designs.
Markets with combinatorial valuations and/or specialized constraints introduce complexity that limits the effectiveness of current auction methods. Under well-known assumptions, market allocations are efficient. However, even when there are no externalities, information asymmetries, or market power, market-clearing prices may fail to exist, may not be unique, or may not be easily computable. In these cases, decentralized economic systems that are guided by market prices may be dynamically unstable. The project will consider the optimal organization of practical exchanges when this is a possibility. Even when market-clearing prices do not exist, auction mechanisms that combine prices and rationing can lead to nearly optimal results. One part of this project will characterize and evaluate the performance of such mechanisms. Sometimes when market clearing resource prices do in fact exist, the relevant resources are so numerous and differentiated that auctions are impractical. Another part of this project will decide how to apply prices in these settings to meet societal goals.
This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.
PUBLICATIONS PRODUCED AS A RESULT OF THIS RESEARCH
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PROJECT OUTCOMES REPORT
Disclaimer
This Project Outcomes Report for the General Public is displayed verbatim as submitted by the Principal Investigator (PI) for this award. Any opinions, findings, and conclusions or recommendations expressed in this Report are those of the PI and do not necessarily reflect the views of the National Science Foundation; NSF has not approved or endorsed its content.
My project, entitled “Auction Design for Complex Centralized Markets,” is mainly focused on finding ways to create effective auction markets that improve economic outcomes in challenging circumstances. The work is a follow-on effort after my successful creation of the theory and rules for the US Broadcast Incentive Auction, which helped reorganize the television broadcast industry to free spectrum for use in wireless data applications. This achievement had been mentioned in my Nobel Prize citation and earnedian Emmy Award from the television industry for my company, Auctionomics.
The follow-on work includes analyses of two other difficult auction design problems and various related and unrelated theoretical developments. One of those problems was water allocation, which is especially challenging because (1) water use affect environmental issues including water salinity and fish and wildlife habitats, (2) return flows mean that water, unlike resources such as oil, can often be used more than once, and (3) ground water from reservoirs interacts in complicated ways with surface water. The second problem concerns markets like electricity and fishing rights, in which the technologies of production are not convex, which can make their regulation using systems of prices particularly difficulty.
The NSF project also funded related projects on languages for expressing complicated bids, investment incentives associated with approximation algorithms, social preferences for environmental resources. And a topic in organization theory.
Last Modified: 11/07/2024
Modified by: Paul R Milgrom
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