Morett, Fernando (2019) How To Build An Auction Machine. [Preprint]

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Abstract

The Federal Communications Commission (FCC) auction was a new kind of auction used for the allocation of licences for the use and exploitation of the electromagnetic spectrum in The United States. This auction set a methodological standard of design and engineering in economics; its design adopted some properties from the traditional English and Dutch auctions and it also add new innovative properties, such as multiple rounds where bidders can return unwanted items. Unlike the English and the Dutch auctions, the FCC auction was designed and built by social scientists. The large revenue it raised was hailed as a proof of success of mechanism design theory. This success led some European governments to hire mechanism designers for the design and implementation of similar auctions for the allocation of licences on the electromagnetic spectrum. The success was not only due to the knowledge available from mechanism design theory but also from the practical knowledge experimental economists have, they performed the experiments testing the rules and mechanisms, which produced data crucial for the design and the implementation of the new auction. In this article, I present a methodological account of the FCC auction design discussing two main components of it, namely the blueprint produced by mechanism designers and the experiments performed for producing the data missing in the blueprint. I also evaluate this blueprint using the types of design and principles, namely minimal analogy and type-hierarchies.

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Item Type:	Preprint
Creators:	Creators Email ORCID Morett, Fernando f.morett@lse.ac.uk
Keywords:	Philosophy of Social Sciences, Mechanical View, Experimental Economics, Auction Design, Institutional Design, Methological Naturalism
Subjects:	Specific Sciences > Economics Specific Sciences > Engineering General Issues > Experimentation General Issues > Philosophers of Science General Issues > Science and Policy
Depositing User:	Fernando Morett
Date Deposited:	16 Apr 2019 18:43
Last Modified:	16 Apr 2019 18:43
Item ID:	15913
Subjects:	Specific Sciences > Economics Specific Sciences > Engineering General Issues > Experimentation General Issues > Philosophers of Science General Issues > Science and Policy
Date:	15 April 2019
URI:	https://philsci-archive.pitt.edu/id/eprint/15913

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