Auction theory and a note on game mechanisms

Abstract This paper will review important topics on the subject of auction theory and mechanism design, these include: efficiency first foremost, also revenue comparison between different types auctions issue incentive compatibility, individual rationality with general idea proof that bilateral trade is inefficient. Mechanism design tells us if buyers sellers both have private information full impossible, however Vickrey (single unit auction) be efficient i.e. put goods in hands value them most. However, conclusion from this because overvaluation bidders main result inefficient, bids are too high. When weak strong compared bidders’ expected payoff higher second price (SPA), while bidder prefers (FPA) bid.