Good stuff again, @spectrumecons. I agree it is sad that more people do not understand the game theoretic nature of auctions. Perhaps the best illustration was in the UK auction for newly issued broadcasting licenses.
Before the auction started, the media predicted that the licenses would be sold for about 5 billion pounds - solely due to what private companies had said they were willing to pay. Due to the clever auction designs by game theorists which forced interested parties to reveal their "true" valuation of those licenses, they were actually sold for over 20 billion pounds.
Auction design plays a key role in assuring that sellers are not ripped off by consumers who know more about what they are trying to buy than the seller does. Here is the relevant article: http://www.nuff.ox.ac.uk/users/klemperer/biggestpaper.pdf
RE: Economic Concepts #4 - Auctions