Linde Institute/Social and Information Sciences Laboratory (SISL) Seminar

In May 2010, the State of Victoria auctioned licenses to operate gaming machines (slot machines).  The auction was highly constrained by social policies regarding gambling.  It was large with 23,000 licenses auctioned to 400 bidders in 178 markets.   It was also political since revenue from gaming machines constituted a large proportion of the Victorian government revenue. The auction was constructed from first principles of economic theory and it was tested extensively under laboratory conditions before application.  It produced $620 million in revenue in ten hours. In theory, experiments and in the field the auction  converged to near the competitive equilibrium of the appropriate model. The lecture will address the science that supported this project from the basic theoretical principles and experiments. The actual auction data will be used to illustrate how well the underlying science performed in the field.