General equilibrium methodology applied to the design, implementation and performance evaluation of large, multi-market and multi-unit policy constrained auctions
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.
Additional Information
© The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature 2022. Received 15 September 2021. Accepted 18 April 2022. Published 31 May 2022. The financial support for analyzing the data and developing this report provided to Plott by the Rising Tide Foundation (Grant Number: RTF-19-500) and the John Templeton Foundation (Grant Number: 58067) are gratefully acknowledged. We also thank the Caltech Laboratory for Experimental Economic and Political Science for technical support and two anonymous referees for valuable comments. The Victorian government allowed limited data analysis for scientific purposes. The cooperation and help of William Stevenson of Intelligent Market Systems LLC were fundamental. The authors have no relevant financial or non-financial interests to disclose. Financial support for this research is indicated in the acknowledgement footnote.Additional details
- Eprint ID
- 115839
- DOI
- 10.1007/s00199-022-01431-7
- Resolver ID
- CaltechAUTHORS:20220725-157131000
- RTF-19-500
- Rising Tide Foundation
- 58067
- John Templeton Foundation
- Caltech Laboratory for Experimental Economics and Political Science
- Created
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2022-07-27Created from EPrint's datestamp field
- Updated
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2022-07-27Created from EPrint's last_modified field