Multi-unit auctions with budget limits

We study multi-unit auctions for bidders that have a budget constraint, a situation very common in practice that has received relatively little attention in the auction theory literature. Our main result is an impossibility: there is no deterministic auction that (1) is individually rational and dominant-strategy incentive-compatible, (2) makes no positive transfers, and (3) always produces a Pareto optimal outcome. In contrast, we show that Ausubel?s “clinching auction” satisfies all these properties when the budgets are public knowledge. Moreover, we prove that the “clinching auction” is the unique auction that satisfies all these properties when there are two players. This uniqueness result is the cornerstone of the impossibility result. Few additional related results are given, including some results on the revenue of the clinching auction and on the case where the items are divisible.     

Categorization of tourist attractions and the modeling of tourist cities: based on the co-plot method of multivariate analysis

This paper examines the relation between the trip characteristics of tourists and the attractions that they visit. This analysis was made possible by means of a new method of multivariate analysis—co-plot—that enables the simultaneous analysis of observations and variables and the graphic presentation of the interrelations among them. Jerusalem was seen as an “ideal” city for the demonstration of the co-plot method of data analysis due to the heterogeneity of its tourism. The research was conducted between September 1998 and March 1999. The results of the statistical analysis show that Jerusalem's tourist attractions can be categorized into four distinct groups and that there is a tendency of spatial concentration among sights belonging to the same group. Based on these results, a spatial model of tourism consumption in large cities was developed.     

The true effect of students’ employment on the duration of studies

We examine the effect of the first-degree students’ employment on the prolongation of their studies. When employing a popular instrumental variable, the regional unemployment rate, we find a negative impact of students’ employment on duration of studies. Then, adding a predetermined IV – the individual’s employment prior to the beginning of academic studies – turns the estimate positive. Furthermore, we find that the relationship between the extent of students’ employment and duration of their studies depends on their age: among the younger students (aged 22–26), the extent of employment has no effect on the duration of studies, while among the older students, the effect is positive and statistically significant.     

Combinatorial agency

We study a combinatorial variant of the classical principal-agent model. In our setting a principal wishes to incentivize a team of strategic agents to exert costly effort on his behalf. Agents? actions are hidden and the principal observes only the outcome of the team, which depends stochastically on the complex combinations of the efforts by the agents. The principal seeks the mechanism that maximizes the principal?s net revenue given an equilibrium behavior of the agents. We investigate the structure of the optimal mechanism for various production technologies as the principal?s value from the project varies. In doing so we quantify the gap between the first-best and second-best solutions. Our results highlight the qualitative and quantitative differences between production technologies that exhibit complementarities and substitutabilities between the agents? actions. In comparing the first best with the second best we highlight the role of effort monitoring by the principal. As we shall see, the benefit from monitoring crucially depends on the underlying technology, with the two polar cases being perfect substitution and perfect complementarity.     

Mechanisms for a spatially distributed market

We consider the problem of a spatially distributed market with strategic agents. A single good is traded in a set of independent markets, where shipment between markets is possible but costly. The problem has previously been studied in the non-strategic case, in which it can be analyzed and solved as a min-cost-flow problem. We consider the case where buyers and sellers are strategic. Our first result gives a double characterization of the VCG prices, first as distances in a certain residue graph and second as the minimal (for buyers) and maximal (for sellers) equilibrium prices. This provides a computationally efficient, individually rational and incentive compatible welfare maximizing mechanism. This mechanism is, necessarily, not budget balanced and we also provide a budget-balanced mechanism (which is also computationally efficient, incentive compatible and individually rational) that achieves high welfare. Finally, we present results for some extensions of the model.     

From ideological space to recreational tourism: the Israeli forest

ABSTRACT

The forest as a leisure, recreation, and tourist space is growing in significance as part of nature-based tourism. It contributes to social and economic development, particularly in light of the global trend for more recreation and tourism in developed and developing countries. The main aim of this paper is to describe and analyze the evolution of forest development policy and its implications for the function of the forest as a recreation and leisure space, using an Israeli case study. The methodology is based on historic-geographic research to analyze forest tourism over time and into the present. The study finds that the spatial processes that took place over nearly a century in Israel transformed its forests from expressions of an ideology to spaces dedicated to leisure, recreation, and tourism.     

Informational limitations of ascending combinatorial auctions

We study the inherent limitations of natural widely-used classes of ascending combinatorial auctions. Specifically, we show that ascending combinatorial auctions that do not use both non-linear prices and personalized prices cannot achieve social efficiency with general bidder valuations. We also show that the loss of efficiency can be severe and that only a diminishing fraction of the social welfare may be captured. This justifies the added complexity in the auctions suggested by, e.g., Parkes and Ungar (2000) [29] and Ausubel and Milgrom (2002) [2].     

The Interaction of Building Codes and Housing Prices

The study analyzes the effect of restrictive building codes on the price of housing, and the simultaneous impact of housing values on the strictness of codes. A model is defined and estimated, using data for more than 1100 localities. The results show that strict codes raised housing values, in 1970, by about one thousand dollars. They furthermore show that the strictness of codes is in turn affected by housing values, as well as by the strength of construction unions. Homeowners and construction unions are thus both observed to gain from restrictive building codes, which can explain the prevalence of such regulations.     

Truthful approximation mechanisms for restricted combinatorial auctions

When attempting to design a truthful mechanism for a computationally hard problem such as combinatorial auctions, one is faced with the problem that most efficiently computable heuristics can not be embedded in any truthful mechanism (e.g. VCG-like payment rules will not ensure truthfulness).We develop a set of techniques that allow constructing efficiently computable truthful mechanisms for combinatorial auctions in the special case where each bidder desires a specific known subset of items and only the valuation is unknown by the mechanism (the single parameter case). For this case we extend the work of Lehmann, O'Callaghan, and Shoham, who presented greedy heuristics. We show how to use If-Then-Else constructs, perform a partial search, and use the LP relaxation. We apply these techniques for several canonical types of combinatorial auctions, obtaining truthful mechanisms with provable approximation ratios.     

Strategic information sharing between competing retailers in a supply chain with endogenous wholesale price

This paper introduces a new motivation for information sharing in decentralized supply chains—as a mechanism to achieve truthful information sharing and to reduce signaling costs. We study a two-echelon supply chain with one manufacturer selling a homogenous product to n price-setting competing retailers. Each retailer has access to private information about the potential market demand, and the retailers have an ex-ante incentive to share this information with each other and to conceal the information from the manufacturer. However, without a mechanism that induces the retailers to truthful information exchange as their strategic choice, no information can be exchanged via pure communication (cheap talk). To overcome this obstacle, two signaling games are analyzed: in the first game, information is shared truthfully among the retailers; in the second game, information is also shared truthfully with the manufacturer. We show that under some conditions sharing information with the manufacturer results in a higher profit for the retailers.