A SURVEY OF AUCTION THEORY AND AUCTION FORMATS

Abstract

All around the world, auctions distribute enormous values between buyers and sellers on daily basis. Auctions exert such a major impact on global markets that the 2020 Nobel Prize for Economics went to Paul Milgrom and Robert Wilson for helping to shed light on the murky world of leveraging strategic gameplay and information asymmetry where fear of the winner’s curse rules. In addition, the laureates invented new auction formats benefitting buyers, sellers, and taxpayers around the world. This paper surveys auction theorems in the evolving auction literature as well as their applications to corporate finance. Developing countries can reap enormous efficiency gains from the implementation of innovative formats in government auctions.