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Analyzing the Airwaves Auction (1998)
| Venue: | Journal of Economic Perspectives |
| Citations: | 230 - 7 self |
BibTeX
@ARTICLE{Mcafee98analyzingthe,
author = {R. Preston Mcafee and John Mcmillan},
title = {Analyzing the Airwaves Auction},
journal = {Journal of Economic Perspectives},
year = {1998},
volume = {10},
pages = {159--175}
}
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Abstract
The US government recently sold spectrum rights using an innovative auction design, the simultaneous ascending auction, invented by economic theorists. The auction outcomes were broadly consistent with the expectations of the theorists. The auction form should have many other applications. March 21, 1998 Just as the Nobel committee was recognizing game theory's role in economics by awarding the 1994 prize to John Nash, John Harsanyi, and Reinhard Selten, game theory was being put to its biggest use ever. Billions of dollars worth of spectrum licenses were being sold by the US government, using a novel auction form designed by economic theorists. Suddenly, game theory became news. William Safire in the New York Times called it "the greatest auction in history." The Economist remarked, "When government auctioneers need worldly advice, where can they turn? To mathematical economists, of course . . . As for the firms that want to get their hands on a sliver of the airwaves, their best bet is to go out first and hire themselves a good game theorist." Fortune said it was the "most dramatic example of game theory's new power . . . It was a triumph, not only for the FCC and the taxpayers, but also for game theory (and game theorists)." Forbes said, "Game theory, long an intellectual pastime, came into its own as a business tool." The Wall Street Journal said, "Game theory is hot." The government auctioned licenses to use the electromagnetic spectrum for personal communications services (PCS): mobile telephones, two-way paging, portable fax machines, and wireless computer networks. Thousands of licenses were offered, varying in both geographic coverage and the amount of spectrum covered. The bidders were the local, long-distance, and cellular telephone companies, as well as...
Keyphrases
game theory airwave auction economic theorist u government auction outcome innovative auction design new york time spectrum license many application two-way paging electromagnetic spectrum auction form wireless computer network john harsanyi game theorist new power business tool william safire intellectual pastime mathematical economist good game theorist spectrum right mobile telephone personal communication service reinhard selten wall street journal geographic coverage dramatic example novel auction form john nash government auctioneer cellular telephone company nobel committee portable fax machine
