auction theory

Question: “Discuss the application of auction theory principles to the design of sales for houses.”

Discussion Format: The discussion must be within the context of how one would advise a firm involved in the sale of houses using an, as yet, undecided auction format. Conversely, where one particular format dominates an existing market, the advice could either address why an alternative auction format would be more beneficial; or why there would be no benefit in changing the current dominant form.

The Focus: Particular attention must be paid to the implications that can be drawn for the auction’s design in relation to the Revenue Equivalence Theorem (RET). The assumptions and conditions stipulated within the RET need to be related to the nature of the relevant market (for houses market), so as to maximize the rent (otherwise conceived as profit, revenue, or benefit) for the hypothetical seller of houses.

Resources (to be used):
• Lecture Notes (will be attached in my account) and tutorial activities;
• References and related material provided in the Unit Moodle site;
• Independent research on the application of the auction theory in real world situations;
• Independent research on commercial auctions, such as web-based auction sites;
• Independent research on Articles in ‘Journals’, the ‘Guardian’, ‘Financial Times’, ‘The Economist’ and journalistic web-based reports on Auctions;

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