Skip to main content
    • Aa
    • Aa

A tale of two auctions


Advocates for a ‘different and innovative approach’ to conceptualizing markets have argued that it is possible to reengineer markets to deliver any number of salutary public policy goals. These ‘consulting engineers for the market economy’ have supported their ambitions by referring to the participation of game theorists in the design and implementation of spectrum auctions. However, the variegated and inconsistent lessons drawn from their participation indicate that the role game theorists actually played in the auctions is not well understood. The confusion appears to stem from significant omissions in the available (mostly first-hand) accounts, which are boastful in taking credit for the performance of the auctions but strangely demure in recounting the precise measures undertaken to bring it about. In this paper, I provide an unexpurgated account of the circumstances surrounding the participation of game theorists in the most celebrated of spectrum auctions, those held under the auspices of the US Federal Communications Commission (FCC). Using the FCC's archival records, I recover the suppressed role of the commercial funding of economic research in determining both the extent and the nature of the economists' participation. This analysis emphasizes the crucial importance of the method of funding in determining how economic research is brought to bear on public policy.

Corresponding author
*Correspondence to: Department of Business and Economics, Roanoke College, Salem, VA 24153, USA. Email:
Linked references
Hide All

This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

O. Ashenfelter (1989), ‘How auctions work for wine and art’, Journal of Economic Perspectives, 3 (3): 2336.

L. Ausubel and P. Milgrom (2005), ‘Ascending proxy auctions’, in P. Cramton , Y. Shoham , and R. Steinberg (eds), Combinatorial Auctions, Cambridge, MA: MIT Press, pp. 7998.

J. Banks , J. Ledyard , and D. Porter (1989), ‘Allocating uncertain and unresponsive resources: an experimental approach’, RAND Journal of Economics, 20 (1): 125.

J. Banks , M. Olson , D. Porter , S. Rassenti , and V. Smith (2003), ‘Theory, experiment, and the Federal Communications Commission spectrum auctions’, Journal of Economic Behavior and Organization, 51 (3): 303350.

A. Barry and D. Slater (2003), ‘Technology, politics and the market: an interview with Michel Callon’, Economy and Society, 31 (2): 285306.

G. Burchell , C. Gordon , and P. Miller (eds) (1991), The Foucault Effect, Chicago: University of Chicago Press.

M. Bykowsky , R. Cull , and J. Ledyard (2000), ‘Mutually destructive bidding: the FCC auction design problem’, Journal of Regulatory Economics, 17 (3): 205228.

F. Guala (2001), ‘Building economic machines’, Studies in the History and Philosophy of Science, 32 (3): 453477.

L. Irving (1995), ‘Spectrum management: a balancing process’, IEEE Communications Magazine, 33 (12): 4446.

E. Kwerel and G. Rosston (2000), ‘An insiders' view of the FCC spectrum auctions’, Journal of Regulatory Economics, 17 (3): 253289.

J. Ledyard , D. Porter , and A. Rangel (1997), ‘Experiments testing multiobject allocation mechanisms’, Journal of Economics and Management Strategy, 6 (3): 639675.

E. Maskin (2004), ‘The unity of auction theory: Milgrom's masterclass’, Journal of Economic Literature, 42 (4): 11021115.

R. P. McAfee and J. McMillan (1996), ‘Analyzing the airwaves auction’, Journal of Economic Perspectives, 10 (1): 159175.

K. McCabe , S. Rassenti , and V. Smith (1991), ‘Smart computer-assisted markets’, Science, 254 (5031): 534538.

J. McMillan (1994), ‘Selling spectrum rights’, Journal of Economic Perspectives, 8 (3): 145162.

J. McMillan (1995), ‘Why auction the spectrum?’, Telecommunications Policy, 19 (3): 191199.

J. McMillan (2003), ‘Market design: the policy uses of theory’, AEA Papers and Proceedings, 93 (2): 139144.

J. McMillan , M. Rothschild , and R. Wilson (1997), ‘Introduction’, Journal of Economics and Management Strategy, 6 (3): 425430.

A. Mikoucheva and K. Sonin (2004), ‘Information revelation and efficiency in auctions’, Economics Letters, 83 (3): 277284.

C. Plott (1997), ‘Laboratory experimental testbeds: application to the PCS auction’, Journal of Economics and Management Strategy, 6 (3): 605638.

D. Porter , S. Rassenti , A. Roopnarine , and V. Smith (2003), ‘Combinatorial auction design’, Proceedings of the National Academy of Sciences, 100 (19): 1115311157.

A. Roth (2002a), ‘The economist as engineer’, Econometrica, 70 (4): 13411378.

R. Weber (1997), ‘Making more from less: strategic demand reduction in the FCC spectrum auctions’, Journal of Economics and Management Strategy, 6 (3): 529548.

Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Journal of Institutional Economics
  • ISSN: 1744-1374
  • EISSN: 1744-1382
  • URL: /core/journals/journal-of-institutional-economics
Please enter your name
Please enter a valid email address
Who would you like to send this to? *


Altmetric attention score

Full text views

Total number of HTML views: 2
Total number of PDF views: 16 *
Loading metrics...

Abstract views

Total abstract views: 185 *
Loading metrics...

* Views captured on Cambridge Core between September 2016 - 17th August 2017. This data will be updated every 24 hours.