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2019/2020  KAN-CMECV1246U  Auctions: Introduction to the Theory and its Application

English Title
Auctions: Introduction to the Theory and its Application

Course information

Language English
Course ECTS 7.5 ECTS
Type Elective
Level Full Degree Master
Duration One Semester
Start time of the course Spring
Timetable Course schedule will be posted at calendar.cbs.dk
Max. participants 40
Study board
Study Board for HA/cand.merc. i erhvervsøkonomi og matematik, MSc
Course coordinator
  • Anette Boom - Department of Economics (ECON)
Main academic disciplines
  • Economics
Teaching methods
  • Face-to-face teaching
Last updated on 21-02-2019

Relevant links

Learning objectives
After having attended the course the students should be able
  • to explain the theoretical models of auction theory covered in the course
  • to relate them to the cases and application fields discussed in class
  • and to apply the theoretical auction models taught in class to real world situations in which auctions are used.
Course prerequisites
1. Microeconomics and game theory on the HA math level. Students who do not have knowledge of these topics at the same level, but still wish to enroll, should be prepared to work harder to catch up.
2. Having attended the course Economics of Information and Contracts is not a prerequisite but might be beneficial.
Auctions: Introduction to the Theory and its Application:
Exam ECTS 7,5
Examination form Oral exam based on written product

In order to participate in the oral exam, the written product must be handed in before the oral exam; by the set deadline. The grade is based on an overall assessment of the written product and the individual oral performance.
Individual or group exam Individual exam
Size of written product Max. 10 pages
Assignment type Synopsis
Written product to be submitted on specified date and time.
20 min. per student, including examiners' discussion of grade, and informing plus explaining the grade
Grading scale 7-point grading scale
Examiner(s) Internal examiner and second internal examiner
Exam period Summer
Make-up exam/re-exam
Same examination form as the ordinary exam
A new synopsis needs to be submitted for the retake exam
Course content, structure and pedagogical approach

The aim of the course is to give the students an introduction to auction theory and how this theory can be applied to real world situations where auction mechanisms are used or which can be analyzed with the tools from auction theory.


Auctions or auction-like mechanisms are used in many real world situations. Examples range from auctions of fresh food products (the regular fish auctions in Hanstholm) or agricultural inputs (the cattle auctions in Aars) to art auctions (Sotheby’s in London), spectrum auction (the 5G auction of the US American Regulator FCC), electricity auctions (the day-ahead Nord Pool spot market) or treasury auctions (the treasury auctions of the Federal Reserve Bank in New York). However, why are auctions so often used to allocate products? Under which circumstances are auctions particularly well suited to sell an object, compared to other selling mechanisms? What are the optimal bidding strategies of buyers in different auction formats? Which auction formats should sellers choose, if they want to maximize their revenues? These and other questions are addressed by auction theory which analyses auctions as games of incomplete information.


 First the students are introduced into different types of auctions. Then they will learn under which circumstances the famous revenue equivalence principle applies and what one can conclude from this principle. Naturally we will also discuss under which circumstances the principle cannot be applied. Afterwards we will highlight the relationship between auction theory and mechanism design theory. Finally, if time allows, we will widen our horizon and consider multi-unit instead of single object auctions.


During the whole course we will relate the theory to real world examples and discuss real world evidence from field data or from experiments which should give the students an idea whether the results from auction theory can be applied in practice.

Description of the teaching methods
Mainly lectures, combined with classroom experiments and the solution of some exercises
Feedback during the teaching period
In addition to office hours and email communications, it is expected that the students actively participate in the course and take over small presentations where they will get dialog-based feed-back.
Student workload
Teaching 30 hours
Exam / preparation 56 hours
Preparation of the lectures 120 hours
Last updated on 21-02-2019