Mutually Destructive Bidding: The FCC Auction Design Problem

In general, synergies across license valuations complicate the auction design process. Theory suggests that a simple (i.e., non-combinatorial) auction will have difficulty in assigning licenses efficiently in such an environment. This difficulty increases with increases in fitting complexity. In some environments, bidding may become mutually destructive. Experiments indicate that a properly designed combinatorial auction is superior to a simple auction in terms of economic efficiency and revenue generation in bidding environments with a low amount of fitting complexity. Concerns that a combinatorial auction will cause a threshold problem are not borne out when bidders for small packages can communicate.     

Anonymous sequential games: Existence and characterization of equilibria

Summary In this paper we consider Anonymous Sequential Games with Aggregate Uncertainty. We prove existence of equilibrium when there is a general state space representing aggregate uncertainty. When the economy is stationary and the underlying process governing aggregate uncertainty Markov, we provide Markov representations of the equilibria.Table of notation Agents' characteristics space ( ) - A Action space of each agent (aA) - Y Y = x A - Aggregate distribution on agents' characteristics - (X) Space of probability measures onX - C(X) Space of continuous functions onX - _X Family of Borel sets ofX - State space of aggregate uncertainty ( ) - x _t=1 aggregate uncertainty for the infinite game - = (₁,₂,...,_t,...) - ^{t t} (₁, ₂,..., _t) - L₁(^t,C ×A),v _t Normed space of measurable functions from ^t toC( x A) - 8o(^t,( x A)) Space of measurable functions from ^tto( x A) - X^t X^t= x _s=1 ^t X - _X ^t Borel field onX ^t - v Distribution on - v_t Marginal distribution of v on ^t - v(^t)((¦^t)) Conditional distribution on given ^t - v^t(^s)(v_t(¦^s)) Conditional distribution on ^t given ^s (wheres) - _t Periodt distributional strategy - Distributional strategy for all periods =(₁,₂,...,_t,...) - _t Transition process for agents' types - ( _t,^t,y)(P _t+1(, _t , ^t ,y)) Transition function associated with _t - u _t Utility function - V _t (, a, , ^t) Value function for each collection (, a, , ^t ) - W _t (, , ^t ) Value function given optimal action a - C() Consistency correspondence. Distributions consistent with and characteristics transition functions - B() Best response correspondence (which also satisfy consistency) - E Set of equilibrium distributional strategies - x _t=1 ( ^t , (x A)) - S Expanded state space for Markov construction - (, a, ) Value function for Markov construction - P( _t ^* , _t y)(P(, _t ^* , _t , _y )) Invariant characteristics transition function for Markov game We wish to acknowledge very helpful conversations with C. d'Aspremont, B. Lipman, A. McLennan and J-F. Mertens. The financial support of the SSHRCC and the ARC at Queen's University is gratefully acknowledged. This paper was begun while the first author visited CORE. The financial support of CORE and the excellent research environment is gratefully acknowledged. The usual disclaimer applies.     

Alternative Modelle und Hypothesen der Konsum- und Sparentscheidung(1)

Summary For the analysis of the allocation of personal disposable income to the different consumption goods and savings, an indirect-addilog-expenditure-system (IAES) has been constructed. Compared to the linear-expenditure-system (LES) the IAES to far more flexible and is not based upon the idea of minimum-consumption- or minimum-saving-quotas. On the other hand, marginal income shares are not fixed parameters. The IAES allows the derivation of a systematic savings- and consumption-function and supplies consistent income elasticities. But it will be shown that consistent demand systems are only restrictively able to consider all major determinants of the decision-problem consumption or saving. The derived system does not only neglect the effects of wealth on consumption and savings but also the results of real income fluctuations due to the business cycle. Also phenomena like unemployment and uncertainties regarding estimates of the future or inflation are neglected. With the help of an adjustment-procedure a part of these disadvantages has been eliminated. The adjustment with regard to the entire private consumption and savings supplied income elasticities which lead to an almost constant consumption- and savings-share in the period under investigation.     

A competitive general equilibrium model of technology transfer,innovation, and obsolescence

A general equilibrium production model is developed where technologies are embodied in capital goods of different vintages indexed in a continuum. A difference in the extent of existing knowledge determines a wage gap between a developed (north) and a developing region (south). With free flow of technology, relatively backward technologies move to the south. With innovation in the north, a technology cycle is created by which some of the technologies are pushed out of the north into the south. This also tends to widen the wage gap between the regions.     

Transformation or Transmogrification? Ackerman, Hobbes (as in Calvin and Hobbes), and the Puzzle of Changing Constitutional Identity

In this article, I argue that Ackerman's approach to constitutional change is unable to distinguish between changes of degree and changes in kind, or between changes that transform and changes that transmogrify. As a consequence, the model Ackerman proposes fails at its most elemental purpose of illuminating questions of constitutional identity. Transformations fails to tell us who We the People really are or about what we are constituted.     

Augmented serial rules for an excludable public good

Summary. We present a new class of rules named augmented serial rules for the provision of an excludable public good. First, we characterize this class by the four axioms of strategy-proofness, envy-freeness, access independence, and nonbossiness. Second, we identify two important subclasses by imposing an additional axiom: (i) anonymous augmented serial rules by anonymity, and (ii) Moulins serial rule by individual rationality.Received: 31 December 2002, Revised: 9 June 2004, JEL Classification Numbers: D71, D82, H41.This paper is a substantial revision of Serial cost sharing with simple games. I would like to thank Hervé Moulin, Yoshikatsu Tatamitani, an associate editor, and three anonymous referees for helpful suggestions and detailed comments. This research was partially supported by the Ministry of Education, Culture, Sports, Science, and Technology in Japan (Grant-in-Aid for 21st Century COE Program Microstructure and Mechanism Design in Financial Markets).     

Klassische Nationalökonomie gestern und heute

Ohne ZusammenfassungDieser Artikel ist dieungekürzte Fassung des Beitrages Klassische Nationalökonomie des Verfassers zum Staatslexikon (Band IV).     

An Austrian Theory of the Firm

The modern Theory of the Firm uses the concept of rent and makes implicit assumptions about equilibrium. An Austrian (Market Process) Theory of the Firm should have something to say about each of these. Two strategic perspectives are analyzed, the neoclassical microeconomic perspective (using the Ricardo-Marshall approach to rent) and the Market Process perspective (using the Fetter approach to rent). In a neoclassical world, rents indicate unsolved or unexploited inefficiencies as every hypothetical outcome is viewed against the standard of perfect competition. By contrast, in the Market Process world there is no single ideal standard by which to measure any particular outcome. All action takes place in an open ended universe in which the future is continually being created, in which competition is a discovery process.     

The allocation of ideological structures

This article tries to make allocation in the sociology of knowledge more teachable. What may appear as a sectarian magic is transformed into a rational procedure to be used by teacher and student alike. Allocation requires a number of steps by which (1) the ideological structure is made part of an ideology; and (2) the ideology is related to a particular social situation of past or present either by reflecting it in symbolic expression or by reflecting the exact opposite.The old puzzle of how ideological relativism can be asserted from a theoretical position, which — by social background — cannot be anything but relative in itself, falls by the wayside. Temporarily positivism is claimed for any viewpoint which allows empirical verification. It asserts its relativisim but never reaches absolute and final truth. Relative advantages only can be claimed for the many comprehensive social theories at any given time.The term imputation is replaced by the term allocation in this article. Imputation is a direct translation of the German word Zurechnumg. Borrowed from economic theory, this term is unnecessarily complicated. We cannot do more than allocated ideologies in a manner not amenable to precise numerical imputation.     

From “tax state” to “debt state”

The paper is motivated by Joseph A. Schumpeter's The Crisis of the Tax State. It inquires whether the buildup of government debt in peacetimeprosperity is a threat to the stability, existence or creation of viable tax states. The paper begins by setting out Schumpeter's conception of the tax state and the nature of recent political-economic events which have reinvigorated the concept. Next the paper sets out some simple debt dynamics and sketches a debt-induced business cycle arising from heavy reliance on debt finance in peacetimeprosperity. Finally, the paper assesses threats to the tax state in light of recent work on path dependence and positive feedback. An attempt is made to throw some light on whether the plethora of new, and often small, states spawned by the demise of communism can be viable tax states.Essay on Government, the Tax State and Economic Dynamics submitted to the Third Schumpeter Prize Competition.     

On designing economic agents that behave like human agents

This paper explores the idea of constructing theoretical economic agents that behave like actual human agents and using them in neoclassical economic models. It does this in a repeated-choice setting by postulating artificial agents who use a learning algorithm calibrated against human learning data from psychological experiments. The resulting calibrated algorithm appears to replicate human learning behavior to a high degree and reproduces several stylized facts of learning. It can therefore be used to replace the idealized, perfectly rational agents in appropriate neoclassical models with calibrated agents that represent actual human behavior. The paper discusses the possibilities of using the algorithm to represent human learning in normal-form stage games and in more general neoclassical models in economics. It explores the likelihood of convergence to long-run optimality and to Nash behavior, and the characteristic learning time implicit in human adaptation in the economy.     

The number and type of long-term equilibria

We consider a balanced-growth model with finitely many processes, a uniform rate of profits, and a given composition of final demand. Two types of equilibria are distinguished, black and white: the color of an equilibrium is defined by the relative sign of two determinants associated with the operated methods, and can be interpreted as a local property of a cross-dual dynamic process. Under standard economic assumptions, and flukes apart, the number of white equilibria exceeds that of black equilibria by one. In particular the total number of long-term equilibria is odd.     

Artificial worlds and economics,part II

This paper continues the discussion of artificial worlds (AWs) begun in Lane (1993b). Here, the focus is on two kinds of AWs. The first, classifier systems, can be used to represent agents that are capable of generating complex behaviors in response to intermittent rewards from an environment of which they are a part. A collection of such agents, engaging in economic interactions with one another, produces another kind of AW, in which such interesting aggregate behaviors as the formation of bubbles and crashes and technical trading in an artificial stock market, may arise. The second kind of AW considered in this paper is artificial economies. These AWs can provide a dynamic, nonequilibrium, microfounded account of such aggregate-level or macroeconomic phenomena as stable growth paths, business cycles, and Pareto firm-size distributions.     

Robust Institutions

I propose to show how to translate the economic analysis of institutions developed in the tradition of worst case political economy into the lingua franca of robust statistics. An institution will be defined as contingent upon a design theory and the difficulty we consider is the use of the institution by the designer.The technical bridge between institutional robustness and statistical robustness is the the possibility of exploratory data analysis [EDA] with respect to the design theory. In an institutional context with EDA comes the recognition that the model is not completely specified, that we do not fully understand the structure of world before studying it. In a statistical context with EDA comes a non-normal error distribution.The relationship between evolutionary institutions and robust institutions is discussed. A conjecture that rule utilitarianism can be thought of as robust utilitarianism is defended with the historical example of William Paley's discussion of the utility of murder.     

Die fluktuation der Arbeitskräfte

Zusammenfassung Es konnten vier Typen der Fluktuation isoliert werden, die neben persönlichen Komponenten für die Fluktuation der Arbeitskräfte maßgebend sind. Ein Teil der Fluktuation geht auf das Ausprobieren des Arbeitsplatzes — angesichts der Unvollkommenheit der Information — zurück (Probe-Fluktuation). Die Wechselneigung ist daher bei Personen mit kurzer Betriebszugehörigkeitsdauer sowie jüngeren Arbeitskräften (20 bis 30 Jahre) relativ hoch.Eine weitere Form der Fluktuation ist die Reaktion der Arbeinehmer auf Unterschiede in den Nettovorteilen verschiedener Arbeitsplätze (Lohn-Fluktuation). Die Arbeitskräfte wandern per Saldo aus Niedrig- in Hochlohnbetriebe, aus Klein- in Großbetriebe und aus schrumpfenden in expandierende.Das Bestehen eines dualen Arbeitsmarktes impliziert, daß benachteiligte Arbeitskräfte (Ungeschulte mit geringem betriebsspezifischem Training) häufig kündigen, während begünstigte Arbeitskräfte (Geschulte) relativ selten wechseln (Hilfskräfte-Fluktuation). Tatsächlich ist die Wechselneigung von Ungeschulten und Arbeitern (vor allem im industriell-gewerblichen Sektor) weit überdurch-schnittlich. Die Zahl der Wechselfälle wird neben der Wechselneigung durch die alternativen Beschäftigungsmöglichkeiten bestimmt (Konjunktur-Fluktuation). Die Fluktuation schwankt so deutlich mit der Anspannung auf dem Arbeitsmarkt, daß sie als Anspannungsindikator angesehen werden kann.die Branchenunterschiede in verschiedenen Maßzahlen der Fluktuation lassen sich im wesentlichen auf die dargestellten vier Fluktuationstypen zurückführen. (Zur Messung des Arbeitsplatzwechsels empfiehlt es sich, Verbleibenswahrscheinlichkeiten der betrieblichen Zugänge und dienstalterspezifische Fluktuationsraten zu errechnen.)

---

Summary There are four main features of labour turnover. A substantial part of turnover is due to job shopping in view of imperfect information. Therefore, workers with short job tenure and younger employees (20–30 years) reveal a high propensity to quit. Another type of quit behaviour is the reaction of workers to differences in the net advantages of various jobs. The employed move from the low wage to the high wage sector, from small to largescale enterprises and from shrinking to expanding firms. The existence of a dual labour market implies that disprivileged workers (with low general and specific training) quit frequently and privileged workers rarely change the job. In fact, the turnover rate of white-collar workers and persons with higher formal education is far below average. The actual level of labour turnover does not only depend on the propensity to quit but also on the alternative job opportunities. Voluntary quits are so closely related to the tightness of the labour market that they can be regarded as a labour market indicator. Regression analysis shows that the differences in various measures of turnover are essentially due to these four features of turnover. (For measurement of labour turnover it is recomended to use the probabilities of a batch of entrants to survive certain points in time. as well as job tenure-specific turnover rates.)

     

Measuring shock persistence in Austrian unemployment: A note

Zusammenfassung Die Arbeit untersucht unter Verwendung von Techniken der Zeitreihenanalyse Persistenzeigenschaften der Arbeitslosenrate in Österreich. Dabei zeigt sich, daß Schocks in der Arbeitslosenrate langfristig erhalten bleiben, sodaß — lose formuliert — gute und schlechte Arbeitsmarktgleichgewichte in Abhängigkeit von der Geschichte des Prozesses existieren dürften.

---

---

We would like to thank A. Jäger and R. Kunst for helpful comments.     

From Democratic Dualism to Political Realism: Transforming the Constitution

In the latest volume of Bruce Ackerman's We the People, he sets out to demonstrate that the Constitution has been legitimately amended by unconventional means, or by mechanisms other than the Article V amendment process. In making this argument, Ackerman offers a rich constitutional history of the Founding period, the Reconstruction era, and the New Deal. He successfully demonstrates that unconventional methods were used to alter accepted constitutional meaning and government practices during these periods. Unfortunately, Ackerman does not provide an adequate theory that can demonstrate the legal significance of these historical events for future constitutional practice. Moreover, his effort to legitimate the New Deal's constitutional revolution undermines his own normative theory of dualist democracy and seems to embrace a standard Legal Realist analysis that the Constitution simply is whatever powerful government officials declare it to mean.     

Strategy-proof and individually rational social choice functions for public good economies

Summary We consider the problem of choosing an allocation in an economy in which there are one private good and one public good. Our purpose is to identify the class of procedures of choosing an allocation which satisfy strategy-proofness, individual rationality, no exploitation and non-bossiness. Any such procedure is a scheme of semi-convex cost sharing determined by the minimum demand principle.I wish to thank Professors Salvador Barbera, Matthew Jackson, Herve Moulin and William Thomson for their helpful suggestions and two anonymous referees for their detailed comments. Conversations with Professors Hideo Konishi, Shinji Oseto Ken-ichi Shimomura and Stephen Ching were helpful. This work is supported by the Japan Economic Research Foundation and Research Grants PB89-0294 and PB89-0075 from the Direcion General de Investigacion Cientifica y Tecnica, Spanish Ministry of Education.     

Operational Research and the environment

The discipline of Operational Research (OR) is primarily concerned with improving the effectiveness and efficiency of decision processes. These processes take place everywhere in society: industry, banking, agriculture, government, politics. Frequent use of mathematical optimization models is typical of OR. Since the early '80s these models are increasingly packaged in a user-friendly way, as Decision Support Systems. In the following we will illustrate how OR can be used to describe and solve a number of environmental problems.     

An essay on the “New” Kaldorian macrodynamics

Conclusion Considering that employment and output are positively related, and that productivity growth and inflation are inversely related, we see that Kaldor, through the hypothesis of embodied technical progress and induced investment, has presented us with the elements of a general theory of stagflation. As such, this Kaldorian theory constitutes the only serious opposition to the various monetarist explanations (most notably Milton Friedman's 1977 Nobel Lecture) of a positively sloped Phillips curve, based on the inflationary expectations mechanism and the notion of a changing natural rate of unemployment. Not so long ago, people were talking about the so-called locomotive theory of export-led growth, with such surplus countries as Germany and Japan, or large economies as the U. S., playing the role of the engine, given that the equally surplus oil-producing countries will also maintain a strong import-demand for industrial output. Fears (perhaps legitimate ones) about inherent inflationary tendencies have caused the abandonment of this approach to pull the world economy from its vicious stagflationary circle. Contrary to the monetarists' view that a recession is needed in order to combat inflation, Kaldor's own theory can serve as a guide to those who, more optimistically, believe or simply hope that investment and output growth is the only longterm weapon against both inflation and unemployment.The importance of the writings of Professor Kaldor, influential as they have proved to be well beyond his immediate Cambridge milieu, cannot be overestimated. He is a truly great economist, one of the few who make economic theory rather than simply repeat established dogmas. All economists will be educated by reading and re-reading his collected essays.