Microtheory Seminar Series. The First-Price Principle of Maximizing Economic Objectives (joint with Byeong-hyeon Jeong)
Published: 24 September 2025
7 October 2025. Professor Marek Pycia, University of Zurich
Professor Marek Pycia (University of Zurich)
The First-Price Principle of Maximizing Economic Objectives (joint with Byeong-hyeon Jeong)
Tuesday, 7 October 2025, 16:00–17:30
Room 386AB, Adam Smith Business School
Abstract
We show that the first-price auction format—when enriched by restrictions on bid space—is sufficiently flexible to maximize in equilibrium any standard objective, including revenue, welfare, bidder surplus, equality, and their combinations. As this first-price principle is valid with no distributional assumptions needed, it enables us to analyze problems that are beyond the scope of Myersonian mechanism design. The resulting optimal auctions might take surprising forms: not only reserve prices but also bid caps or gaps in bid space might be optimal. We provide tools for the optimal design of these auctions and establish conditions for equilibrium existence and uniqueness.
Biography
Marek Pycia is the Professor of Organizational Economics at the University of Zurich and Co-Director of the Zurich Center for Market Design. His research led to the establishment of a kidney-transplant voucher program in the US and influenced the design of US school systems. The research has been published in leading international journals including the American Economic Review, Econometrica, the Journal of Political Economy, and the Review of Economic Studies, and it is supported by an ERC Consolidator Grant. Marek Pycia has served on the editorial boards of Theoretical Economics, the Journal of Economic Theory, the International Journal of Game Theory, the Journal of Mechanism and Institution Design, as well as Games and Economic Behavior, and he is a Research Fellow at the Centre for Economic Policy Research (CEPR). He worked at the University of California, Los Angeles, the Pennsylvania State University, and the Leon Koźmiński Academy of Entrepreneurship and Management. He holds a Ph.D. in Economics from the Massachusetts Institute of Technology.
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First published: 24 September 2025