Charles R. Plott retells his experience during the creation and implementation process of the Gaming-Machine Auction held in Victoria, Australia, in May 2010. In an attempt to achieve a more competitive allocation of gaming machine rights among the user industry, the Australian government hired Plott to create an unprecedented, large auction system. His task was to create a single-day, 10-hour auction that would ensure an effective distribution of machine rights, equally among hotel/casinos and clubs, according to strict area constraints and under rigorous political vigilance.
Plott describes the complexity of the auction set-up, and the considerations involved in making this a functional, transparent arrangement that met all of these goals. By returning to basic economics and the law of supply and demand, he explains the core principles behind the creation of the auction system. New methods of measurement and the use of bid-functions ultimately reveal a demand function at the margin, and result in one of the first-ever observations of the dynamic convergence of a system to the classical competitive equilibrium.
Despite few, irrelevant objections, the Victoria Gaming Machine Auction was completed successfully, complying with all the stringent time and policy constraints, generating predictable revenue, and serving as a crucial model in the history of experimental economics.
09 de septiembre de 2010
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Universidad Francisco Marroquín