Auction Theory In Vaccinations
Article link: https://www.lindau-nobel.org/blog-how-auction-theory-could-help-distribute-vaccines-equitably-across-the-world
This past week we started talking about auctions and in looking for an article on modern day auctions I came across this idea of auction theory and covid vaccinations. In the article, Tibi Puiu talks about how auction theory can be used to estimate inventory and distribute limited resources. This would be especially helpful in distributing COVID vaccines or ventilators. However, this should not be the type of auction where the highest-bidder wins. Everyone needs access to the vaccine and it shouldn’t be the case that you can’t get it if you don’t have enough money. As you can see in the graph below, there is a huge difference between the amount of people that have received the vaccine in North America versus Africa, simply because North America has more resources to be able to pay and get their hands on a large amount of vaccines. Biden has announced that he plans to give vaccines to countries in need, but clearly from this graph it is not enough.
I am not sure exactly what the solution is or if there even are auctions where the highest bidder doesn’t win as that is the only kind we have talked about so far in class. And while these auctions do work for things like a unique valuable object, something like a vaccine where it is needed by everyone should not just be for the rich.
Puiu also mentions Paul Milgrom and Robert Wilson who won the Nobel Prize in Economic Sciences in 2020 for their work on auction theory. Milgrom recognized the need for a non-traditional auction when it came to COVID vaccination distribution. In another interview, he mentions the problem of California stocking up on ventilators while New York didn’t have enough in that exact moment. He said that the auction “could be a system that incorporates trading rights to use respirators tomorrow for rights to use respirators today – so that everyone is on an equal footing.” (https://news.stanford.edu/2020/11/19/bid-picture-nobel-prize-winners-explain-auction-theory-collaboration/). This reminds me of the matching auctions we talked about in class and how cities or countries with greater needs could have higher priorities, instead of it just being the highest bidder. Ultimately I think we could have done a lot better with COVID vaccine distribution, and still can, if it wasn’t focused solely on who can pay most for it and auction theory was utilized in a way that was fair.