Collusion in one-shot second-price auctions

Summary. Most of the literature on collusive behavior in auctions ignores two important issues that make collusion difficult to sustain at least in one-shot interactions: the detection of cheating and the verification of bids. Colluding bidders may deceive each other by using shill bidders. Also, if the identities of the bidders and their bids are not published then it would be difficult to verify the bid of a colluding bidder. This paper addresses these problems in one shot second price auctions where one bidder offers another bidder a side payment in exchange for not participating in the auction, while the number of other bidders is stochastic. In spite of the barriers to collusion mentioned above, a simple side payment mechanism which depends only on the auction price is introduced. It induces a successful collusion, eliminates the verification problem, provides no incentive for the use of shill bidders and guarantees that the proponent obtains ex-post non-negative payoff. The colluding bidders are ex-ante strictly better off compared with the competitive case, irrespective of their types.Received: 27 November 2002, Revised: 28 January 2005, JEL Classification Numbers: C72, D44, D82.Yair Tauman: Correspondence toWe would like to thank an anonymous referee for very valuable comments and suggestions that significantly improved the paper. We thank Shmuel Zamir for a helpful discussion.     

A Cross-Country Database for Sector Investment and Capital

This article presents a new database of investment and capitalin agriculture, manufacturing, and the overall economy. It covers62 industrial and developing countries for the years 1967–92.A common method is used in the calculations to facilitate comparisonsacross countries and sectors. The sensitivity of the calculationsto choices of parameters and estimation methods is tested. Collectively,the data show that as economies grow, capital stocks accumulate,but the composition of capital changes. Together and individually,capital stocks in agriculture and manufacturing constitute asmaller share of the total capital stock than they did 20 yearsago. Capital-labor ratios show that agriculture has become morecapital intensive in most countries. The composition of agriculturalcapital has changed as well; capital from investments in orchardsand livestock has declined relative to capital from fixed investmentsin machinery, irrigation, and buildings.     

Robotics projects and learning concepts in science, technology and problem solving

This paper presents a study about learning and the problem solving process identified among junior high school pupils participating in robotics projects in the Lego Mindstorm environment. The research was guided by the following questions: (1) How do pupils come up with inventive solutions to problems in the context of robotics activities? (2) What type of knowledge pupils address in working on robotics projects? and (3) How do pupils regard or exploit informal instruction of concepts in science, technology and problem solving within a project-based program? Data collection was made through observations in the class, interviews with the pupils, observations of the artifacts the pupils had constructed, and analyses of their reflections on each project. The study revealed that the pupils had often come up with inventive solutions to problems they tackled by intuitively using diverse kinds of heuristic searches. However, they encountered difficulties in reflecting on the problem solving process they had used. In robotics projects, the pupils deal primarily with qualitative knowledge, namely, the ability to identify specific phenomena in a system or factors that affect system performance. The study also showed that pupils are likely to benefit from implementing informal instruction on concepts in science, technology and problem solving into a project-based program. This type of instruction should take place in the context of pupils’ work on their projects, and adopt a qualitative approach rather than try to communicate in the class procedural knowledge learned by rote.     

Predicting product life cycle patterns

In this paper, we propose a new model of adoption and repurchase due to upgrades driven by the utility of technology products that keep improving. The model is able to predict product life cycle patterns that could not be explained previously. Such patterns were used to challenge diffusion theory validity. Mathematically, the model is described as a nonlinear discrete system that depends on a small set of parameters. We investigate the dynamic properties of the nonlinear system using numerical stability analysis. We find domains in the parameters space in which the equilibrium point and the periodical orbits are stable. The domains correspond to population heterogeneity, tendency to upgrade, and the influence of industry response on market dynamics. We also implement our model to fit actual data of two real-world product life cycles with many irregularities and benchmark the results of our model vs. well-known models.     

Environmental and socio-economic sustainability of chinampas (raised beds) in Xochimilco,Mexico City

The chinampas (raised beds) of Xochimilco, Mexico City, are highly productive, traditional wetland agricultural systems, which were able to feed most of the population in pre-hispanic times. There is a strong trend to substitute chinampas with plastic greenhouses for flower production, which creates negative impacts in the landscape, environment and culture. This study compares the environmental and socio-economic sustainability of chinampas and greenhouses, at both the farm and regional levels, using the MESMIS framework. Even though the results show that greenhouses are more profitable, the contribution of chinampas to ecosystem services cannot be substituted by greenhouses, as tree cover is lost, canals are filled and food is not provided. Greenhouses had a higher diversity, but also a higher agrochemical use and are heavily dependent on external inputs and subsidies. Chinampas have shifted from staple crops to commercial horticulture in order to remain a technically viable and economically feasible option for local farmers. However, compensation mechanisms for the provision of ecosystem services are urgently needed if this ancient system is to be maintained. The framework allowed the integration of indicators at both farm and regional scales, combining on-farm surveys with GIS techniques, which could assist in ecosystem service valuation.     

Future‐Oriented Gang Members?

A bstract    Two prominent theories of crime ( Wilson and Herrnstein 1985 ; Gottfredson and Hirshi 1990 ) rely heavily on the notion that criminals are impatient or "present-oriented." In brief, the theories posit that present-oriented individuals will be predisposed to crime because the "costs" of crime (e.g., prison time) lag behind crime's benefits. While the theory has intuitive appeal, it remains controversial. This study considers a data set first presented by Levitt and Venkatesh (2000 ) that details a drug-selling gang's activities. In this gang, low-ranking criminals accept low initial wages in the hope of receiving high future remunerations. As demonstrated in the note, this wage structure is exceedingly difficult to reconcile (both theoretically and empirically) with the notion of present-oriented criminals. In sum, the study suggests that present orientation is at best an incomplete and idiosyncratic explanation of the causes of crime.     

Stock returns and the Miller Modigliani valuation formula: Revisiting the Fama French analysis

Fama and French (2006) use the dividend-discount model to develop the role of expected profitability, expected investment, and the book-to-market ratio as predictors of stock returns. One reported empirical result is anomalous. The valuation model establishes that the comparative static relation between expected returns and expected investment is negative, yet it appears to be positive and insignificant. We show that the posited valuation relations apply at the firm level, and not at the per share level at which they were tested. Once the variables are measured at the firm level, all the Fama French predictions are validated.     

The Shapley Value of a Patent Licensing Game: the Asymptotic Equivalence to Non-cooperative Results

We consider a game in characteristic form played by firms and an outside patent holder of a cost-reducing innovation. The worth of a coalition of players is the total Cournot profit the coalition can guarantee to obtain when it operates an optimal number of its firms while the complement operates any number of its firms as to minimize the profit of the coalition. Only firms in a coalition with the patent holder are allowed to use the efficient technology. We prove that when the number of firms is large, the Shapley value of the patent holder approximates the payoff he obtains in the non-cooperative auction game traditionally studied in the literature.We thank an anonymous referee for very helpful comments that significantly improved the paper. The second author is being partially supported by the Ministry of Education, Culture, Sports, Science and Technology (MEXT), Grant-in-Aid for 21 Century COE Program. He wishes to thank his advisor Yair Tauman and co-advisor Pradeep Dubey for their intellectual guidance, Akira Okada and Haruo Imai for their encouragement, and Shigeo Muto for his helpful comments to the first draft of this paper at the autumn meeting of the Japanese Economic Association in 2003.     

An examination of the relationships between leadership style, quality, and employee satisfaction in R&D versus administrative environments

Academics and executives argue that effective leadership is a key predictor of R&D success as well as quality management. Recent research highlights transformational leadership as a highly effective style shown to predict performance in organizations. However, no study examined the role of transformational and transactional leadership in building quality climate in R&D versus non-R&D settings. We examined the relationship between leadership style and the establishment of a quality environment in an R&D setting based on an empirical study of 511 research engineers and scientists. It is found that both transformational leadership and transactional contingent-reward leadership are related to the establishment of a quality environment in the R&D part of a telecommunications firm. However, the impact of transactional contingent-reward leadership ceases to be significant once both leadership styles are considered simultaneously using structural equations. A transformational leadership style was also found to be related to employee satisfaction.