Syllabus for Economics 415

Daniel R. Vincent: Spring 2021

The University of Maryland

 

Required Texts

There are two texts for this class:

        Flavio Menezes and Paulo Monteiro, An Introduction to Auction Theory, Oxford University Press, 2008, ISBN-10: 0199275998    (MM)
        Alvin Roth, Who Gets What and Why, 2016, Mariner Books, 2016, ISBN 978-0-544-70528-9    (Roth)

Also recommended but not required is

        Paul Milgrom, Putting Auction Theory to Work, 2004, Cambridge University Press. ISBN-10: 0521551846    (Milgrom)
        Ernest Gellhorn and William Kovacic, Antitrust Law and Economics in a Nutshell, 2004, West  Academic Publishing, 0314257233

Since no one textbook covers all the issue I wish to discuss, I also will try to point you to brief online sources in order to save you from having to buy too many texts.

Course Description

This is an advanced and difficult course. Economics 414 is a prerequisite for the course but you should have done very well in that course to consider taking this course. It assumes a willingness to engage in abstract mathematical logic and concepts. You should be comfortable with basic probability theory and first year calculus. The course focuses on recent developments in the design of markets to improve economic performance and to open new economic opportunities. It is divided into three main segments -- auction design, the design of matching mechanisms, and antitrust theory and policy.

Prerequisites: A grade of C- or better in Econ414. Most students are in the Economics Bachelor of Science Program.

PLEASE NOTE: Problem Set 1 is due on ELMS, Friday, Feb.5, 11:59pm. That will give you a sense of if this course is appropriate for you.
 

Web Site

Problem sets for this course is http://www.econ.umd.edu/~vincent/ECON415/ECON415PS.html. You can also find a list of questions for in class presentations/participation This is a new course so I am afraid there are few old exams or assignments available.  Please let me know if you find any bugs in the page and please send me suggestions on ways to make it more useful.
 
Assignments include problem sets, two mid-terms and a final exam.
 
Lectures will be given online via Zoom on Tues-Thurs at 12:30pm.  The first lecture is Tuesday, January 26. Some lectures may be pre-recorded but most will be offered in real time.
 

My office hours are Thursdays, 2:00 – 3:00. However, I generally respond quickly to email questions as well.

Course Outline

Introduction and Math Review.

            1. Review of Mathematics Tools Needed for this Course.
                               
                                http://econweb.umd.edu/~vincent/econ415/Lecture415(0)MathNeeded.pdf

2. If you would like a more detailed introduction to probability and random variables, these lectures by the late Kim Border are excellent: 
                               
                    http://www.its.caltech.edu/~kcborder/Courses/Ma3/#handouts

 

PART I: Auctions.

     A) Theory

            1. Review of Auction Theory.
                               
                                MM Chapter 2.
                                http://econweb.umd.edu/~vincent/econ415/Lecture415(1)AuctionsIntro.pdf

            2.  Solutions of Auctions.

                                MM Chapter 3.1.
                                http://econweb.umd.edu/~vincent/econ415/Lecture415(2)AuctionsEquil.pdf                

            3.  Auctions -- Extensions.
                               
                                MM Chapters 4,5.
                                http://econweb.umd.edu/~vincent/econ415/Lecture415(3)AuctionsExtensions.pdf

              4.  Auctions -- Vickrey and Sequential Auctions.
                               
                                MM Chapters 7.1
                                Larry Ausubel and Paul Milgrom, "The Lovely but Lonely Vickrey Auction"
                                http://econweb.umd.edu/~vincent/econ415/Lecture415(4)SAVickrey.pdf

            5.  Auctions -- Mechanism Design and Revenue Equivalence.
                               
                                MM Chapters 3,6.
                                http://econweb.umd.edu/~vincent/econ415/Lecture415(5)AuctionsREMD.pdf

     B) Practice

            1.  Spectrum Auctions -- Background.
                                Milgrom, Preface and Chapter 1 (On Reserve at McKeldin)
                                Peter Cramton, "Spectrum Auction Design"
                                http://econweb.umd.edu/~vincent/econ415/Lecture415(6)SpectrumAuctionsHistory.pdf

            2.  Spectrum Auctions -- Simultaneous Multi-round Auctions and Incentive Auctions.
                                Milgrom, Preface and Chapter 1    (On Reserve at McKeldin)
                                Peter Cramton, "Spectrum Auction Design"
                                http://econweb.umd.edu/~vincent/econ415/Lecture415(7)AuctionsSMA.pdf
                                FCC Incentive Auctions Applications Procedures, Appendices G,H
                                http://econweb.umd.edu/~vincent/econ415/Lecture415(8)AuctionsIA.pdf

PART II: Matching.

     A) Theory


            1.  Matching, Definitions and Typology.
                                Roth, Chapters 1-3
                                Attila Abdulkadiroglu and Tayfun Somnez, "Matching Markets, Theory and Practice" ,   Sections 1, 2.1, 3.1,4.
                                http://econweb.umd.edu/~vincent/econ415/Lecture415(9)MatchingIntro.pdf


            2.  Two Sided Matching -- One-to-one Deferred Acceptance Algorithm.
                                Roth, Chapters 1-3
                                     Attila Abdulkadiroglu and Tayfun Somnez, "Matching Markets, Theory and Practice" ,   Section 2
                                http://econweb.umd.edu/~vincent/econ415/Lecture415(10)MatchingO2O.pdf

            3.  Two Sided Matching -- Many-to-one Deferred Acceptance Algorithm.
                                Roth, Chapters 1-3
                                     Attila Abdulkadiroglu and Tayfun Somnez, "Matching Markets, Theory and Practice" ,     Section 2
                                http://econweb.umd.edu/~vincent/econ415/Lecture415(11)MatchingM2O.pdf

            4.  One Sided Matching -- Top Trading Cycles.
                                Roth, Chapters 1-3
                               Attila Abdulkadiroglu and Tayfun Somnez, "Matching Markets, Theory and Practice" ,       Section 3
                                http://econweb.umd.edu/~vincent/econ415/Lecture415(12)MatchingTTC.pdf

     B) Practice

            1.  Two Sided Matching -- NRMP.
                                Roth, Chapter 8
                               Attila Abdulkadiroglu and Tayfun Somnez, "Matching Markets, Theory and Practice" ,         Section 2
                                http://econweb.umd.edu/~vincent/econ415/Lecture415(13)MatchingNRMP.pdf
                                Roth, A. "The Evolution of the Labor Market for Medical Interns and Residents: A Case Study in Game Theory", Journal of Political Economy,  1984, Vol Y2, no. 6.
                                Roth, A. and Elliott Peranson "The Redesign of the Matching Market for American Physicians: Some Engineering Aspects of Economic Design", American Economic Review,  1999, Vol. 89, no. 4.

            2.  `One' Sided Matching -- School Choice, Kidney Exchange.
                                Roth, Chapter 9
                               Attila Abdulkadiroglu and Tayfun Somnez, "Matching Markets, Theory and Practice" ,   Section 3.3, 4
                                http://econweb.umd.edu/~vincent/econ415/Lecture415(14)MatchingSC.pdf
                                Al Roth, The Design of School Choice Systems in NYC and Boston: Game Theoretic Issues,  Lecture Notes.


PART III: Slot Auctions and Matching.

          1.      Internet Auctions.
                                Benjamin Edelman, Michael Ostrovsky and Michael Schwarz, "Internet Advertising and the Generalized Second Price Auction", American Economic Review, 2007, Vol. 97, no. 1, pp. 242-259.
                              http://econweb.umd.edu/~vincent/econ415/Lecture415(15)GSPAuctions.pdf
                               

PART IV: Antitrust


     A) Theory
 
            1.  Merger Analysis and Theories of Exclusive Practices

                              http://econweb.umd.edu/~vincent/econ415/Lecture415(16)AntitrustVerticalMergers1.pdf
                              http://econweb.umd.edu/~vincent/econ415/Lecture415(17)AntitrustVerticalMergers2.pdf
                              FCC Memorandum Opinion and Order In the Matter of Comcast, GE and NBCUniversal, Appendix B, Pp. 145-161.

     B) Practice
 
            2.  Horizontal Merger Guidelines.    

            3. Non-merger investigations.

Grading:

As part of your assessment, you must do a 10 minute class presentation of a question answer with a partner. You can sign up on the course calendar with a partner you select if you wish. I will assign the question a week or so before. Your overall grade will be determined as follows:
 
4 Problem Sets (Best 3 scores)                                     30 points
 Presentation                                                                 20 points      

Midterm 1 (Feb. 23)                                                      40 points
 Midterm 2 (April 13)`                                                 40 points
 Final exam  (TBA)                                                       70 points
---------------------------------------------------------------------------------------------------------------
Total                                                                             200 points
 
 
The University policy on grading requires me to use the grading system I announce at the beginning of the semester in all cases.  I cannot make any exceptions to that rule. I assign Letter Grades using +/-.
 
Schedule
The schedule for the course tests and exams are above.  

Problem Set 1 is due Feb. 5 on ELMS. Due dates for remaining Problem Sets will be announced in class. You may work with other students on the problem sets. If you do so, you still must submit your own assignment and note who all contributed to coming up with the solutions.

 

 
NOTE: Students who have a team conflict should let me know right away. Otherwise, travel obligations DO NOT constitute a valid excuse. If you have travel plans that conflict with the exam schedule you should change them now or drop the course now. It is your responsibility to ensure you are available for the midterms and final exam. 

Campus Policies

It is our shared responsibility to know and abide by the University of Maryland’s policies that relate to all courses, which include topics such as:

·       Academic integrity.

·       Student and instructor conduct

·       Accessibility and accommodations

·       Attendance and excused absences

·       Grades and appeals

·       Copyright and intellectual property

 

Please visit www.ugst.umd.edu/courserelatedpolicies.html for the Office of Undergraduate Studies’ full list of campus-wide policies and follow up with me if you have questions.

 

I am aware that there will likely be a group chat established for this course and I encourage the use of a group chat for discussion of the course material and concepts, as long as that discussion follows the acceptability guidelines listed below.  All of the rules in this course syllabus also apply to any postings in a group chat or other social media venue. 

 

Acceptable in Group Chats

Unacceptable in Group Chats

To use in cases when electronic devices are allowed in the course.

To use during exams or at other times when electronic devices are not allowed.

To discuss the concepts and ideas in the course, on homework assignments, and in other course assignments.

To give out an answer to a homework question, clicker question, or other assignment.

To discuss the mathematical equations in the course, how they work, and to do examples.

To give out numerical answers and exact math work to math problems on a homework assignment or other course assignment.

To report to the instructor any conduct or remarks on the group chat that go against the university’s Code of Academic Integrity or Non-Discrimination Policy.

To use to complete an in-class assignment when you are not in class, such as clicker questions or pop quizzes.

 

CourseEvalUM

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