Auctions with shill bidding

Summary. Shill bidding has increased substantially in recent years since the technology employed to conduct on-line auctions enables many sellers to disguise their identities and bid. Although their intent is to gain by misleading the bidders on the value of the object, we show that in a common value auction sellers are worse off shill bidding. In fact, any out-of-auction mechanism that makes it difficult for them to shill bid increases their revenues. In addition, shill bidding reduces the surplus of the bidders and the surplus from trade. It is only the auctioneer who could gain from this activity and in that sense he may not have an incentive from within the auction to discourage shill bidding.Received: 1 February 2002, Revised: 12 August 2003JEL Classification Numbers: D44.Correspondence to: Georgia KosmopoulouWe thank Timothy Dunne, Kevin Grier and the anonymous referees of this journal for helpful comments.     

Late and multiple bidding in second price Internet auctions: Theory and evidence concerning different rules for ending an auction

In second price Internet auctions with a fixed end time, such as those on eBay, many bidders submit their bids in the closing minutes or seconds of an auction. We propose an internet auction model, in which very late bids have a positive probability of not being successfully submitted, and show that late bidding in a fixed deadline auction can occur at equilibrium in auctions both with private values and with uncertain, dependent values. Late bidding may also arise out of equilibrium, as a best reply to incremental bidding. However, the strategic advantages of late bidding are severely attenuated in auctions that apply an automatic extension rule such as auctions conducted on Amazon. Field data show that there is more late bidding on eBay than on Amazon, and this difference grows with experience. We also study the incidence of multiple bidding, and its relation to late bidding.     

Indicative bidding: An experimental analysis

Indicative bidding is a practice commonly used in sales of complex and very expensive assets. Theoretical analysis shows that efficient entry is not guaranteed under indicative bidding, since there is no equilibrium in which more qualified bidders are more likely to be selected for the final sale. Furthermore, there exist alternative bid procedures that, in theory at least, guarantee 100% efficiency and higher revenue for the seller. We employ experiments to compare actual performance between indicative bidding and one of these alternative procedures. The data shows that indicative bidding performs as well as the alternative procedure in terms of entry efficiency, while having other characteristics that favor it over the alternative procedure. Our results provide an explanation for the widespread use of indicative bidding despite the potential problem identified in the equilibrium analysis.     

Ascending prices and package bidding: Further experimental analysis

We explore the performance of multi-round, price-guided combinatorial auctions for a previously untested class of value profiles in which synergies arise from shared fixed costs. We find that, in many cases, a simulator that bids straightforwardly does well in predicting auction performance, but exceptions arise because human bidders sometimes rely on cues besides prices to guide their package selection and because they sometimes bid aggressively on items for which they have no value in order to increase payments by bidders seeking complementary packages. In our experiments, this latter behavior not only raises prices, but can also improve efficiency by mitigating the threshold problem. Comparisons between a combinatorial clock auction (CCA) and a simultaneous ascending auction (SAA) are reported.     

A simple model of coalitional bidding

Summary. We analyze a model of coalitional bidding in which coalitions form endogenously and compete with each other. Since the nature of this competition influences the way in which agents organize themselves into coalitions, our main aim is to characterize the equilibrium coalition structure and the resulting bids. We do so in a simple model in which the seller may have good reason to allow joint bidding. In particular, we study a model in which the agents are budget constrained, and are allowed to form coalitions to pool their finances before engaging in the first price auction. We show that if the budget constraint is very severe, the equilibrium coalition structure consists of two coalitions, one slightly larger than the other; interestingly, it is not the grand coalition. This equilibrium coalition structure is one which yields (approximately) the maximum expected revenue. Thus the seller can induce the optimal (revenue maximizing) degree of cooperation among budget constrained buyers simply by permitting them to collude. Received: June 25, 1999; revised version: November 13, 2000     

Industry concentration in common value auctions: theory and evidence

We examine theoretically and experimentally two countervailing effects of industry concentration in common value auctions. Greater concentration of information among fewer bidders reduces competition but increases the precision of private estimates. We demonstrate that this generally leads to more aggressive bidding. However, the reduction in competition dominates the informational effects, resulting in lower prices. We examine these hypothesized effects experimentally by conducting a series of auctions with constant informational content but distributed among a varying number of bidders. The experimental results are consistent with our theoretical predictions. The authors would like to thank Octavian Carare, Eric Friedman, Luke Froeb, Ron Harstad, Toshi Iizuka, Mike Rothkopf, Charles Thomas, and two anonymous referees, for many useful comments and suggestions.     

On bidding with securities: Risk aversion and positive dependence

DeMarzo et al. (2005) consider auctions in which bids are selected from a completely ordered family of securities whose values are tied to the resource being auctioned. The paper defines a notion of relative steepness of families of securities and shows that a steeper family provides greater expected revenue to the seller. Two assumptions are: the buyers are risk neutral; the random variables through which values and signals of the buyers are realized are affiliated. We show that this revenue ranking holds for the second price auction in the case of risk aversion. However, it does not hold if affiliation is relaxed to a less restrictive form of positive dependence, namely first order stochastic dominance (FOSD). We define the relative strong steepness of families of securities and show that it provides a necessary and sufficient condition for comparing two families in the FOSD case. All results extend to the English auction.     

药品招标采购中的“二次议价”问题及解决对策

探讨药品招标采购中的"二次议价"问题及解决对策,为规范药品采购机制提出政策建议。"二次议价"的主要根源在于量价不挂钩,带量采购能够有效遏制"二次议价"以及由"二次议价"引发的药品回扣和药品购销暗箱操作等痼疾。     

The value of reputation on eBay: A controlled experiment

We conducted the first randomized controlled field experiment of an Internet reputation mechanism. A high-reputation, established eBay dealer sold matched pairs of lots—batches of vintage postcards—under his regular identity and under new seller identities (also operated by him). As predicted, the established identity fared better. The difference in buyers’ willingness-to-pay was 8.1% of the selling price. A subsidiary experiment followed the same format, but compared sales by relatively new sellers with and without negative feedback. Surprisingly, one or two negative feedbacks for our new sellers did not affect buyers’ willingness-to-pay. JEL Classification D82 · L14 · Z13     

China’s Experience with Indexed Government Bonds, 1988–1996: How Credible Was the People’s Republic’s Anti-Inflationary Policy?

The People's Republic of China introduced indexed government bonds in the face of the inflation panic of 1988–89 and reintroduced them when inflation surged upward again in 1993. Measures of inflation expectations—as derived from the trading prices of these indexed bonds—suggest that the government gained credibility from its ability to contain inflation in 1989. But the government's failure to quickly halt the 1993–95 inflation led, by late 1994, to soaring inflation expectations and, ultimately, a heavy financial penalty for the government as the 1992 and 1993 bond issues matured while inflation was still high.     

The Future of East Asia’s Trade: A Call for Better Globalization

This paper is about how East Asia should respond to the challenges of the external environment. The first challenge is the current slowdown in trade, which has been due to cyclical and structural factors such as the decline in productivity and the maturation of global value chains. The rise in protectionism as measured by rising trade restrictiveness has not impacted on trade, but political and policy uncertainty regarding the direction of trade policy seems to have begun to impact on trade growth. The policy stance of increased protectionism and a retreat from the multilateral rules‐based trading system is linked to the pockets of the population who have not seen their incomes improve and who have blamed their plight and increased inequality on globalization. In fact, the issue is more about the lack of effective responses to manage the costs of trade liberalization. East Asian economies need to respond to these challenges by upholding the multilateral rules‐based trading system, continuing the various pathways to regional economic integration, and ensuring better globalization through effective capacity building and policies to address the negative effects of trade liberalization.     

China’s monetary policy: Quantity versus price rules

Two monetary policy rules, the money supply (quantity) rule and interest rate (price) rule, are explored for China in a dynamic stochastic general equilibrium model. The empirical results seem to indicate that the price rule is likely to be more effective in managing the macroeconomy than the quantity rule, favoring the government’s intention of liberalizing interest rates and making a more active use of the price instrument. Moreover, the economy would have experienced less fluctuations had interest rate responded more aggressively to inflation.     

Risk aversion in auctions with asymmetrically informed bidders: A “desensitizer” from uncertainty

In the context of first-price auctions with asymmetrically informed bidders, we show that risk aversion not only increases a player’s bid, but also makes him less sensitive to the probability that other bidders are informed about his private valuation.     

Agents as Empirical Macroeconomists: Thomas J. Sargent’s Contribution to Economics*

Thomas J. Sargent has fundamentally changed and, in the words of Art Rolnick, who interviewed him in 2010, “irrevocably transformed” the field of macroeconomics—whether as sole author, as co‐author with collaborators, as an author influenced by others, or as a teacher of the profession, influencing others. This paper is about his contribution to our field. The Nobel Memorial prize to Thomas J. Sargent and Christopher A. Sims has been awarded for the “empirical research on cause and effect in the macroeconomy” or, more broadly, for macroeconometrics. One often likes to distinguish between theorists, on the one hand, and empiricists and econometricians, on the other. Thomas J. Sargent holds a unique position in between. A key theme in a large part of his work has been to put the agents in his model on equal footing with the econometrician who is observing data from the model (i.e., to assume that agents are themselves empirical macroeconomists or macroeconometricians). In this paper, I use this theme to examine his work and his contributions to the study of economics.     

EXPERIMENTAL EVIDENCE ON ENGLISH AUCTIONS: ORAL OUTCRY VERSUS CLOCK

This paper tests experimentally, in a common value setting, the equivalence between the Japanese English auction (or clock auction) and an oral outcry auction where bidders are allowed to call their own bids. We find that (i) bidding behaviour is different in each type of auction, but also that (ii) this difference in bidding behaviour does not affect significantly the auction prices. This lends some support to the equivalence between these two types of auction. The winner's curse is present: overbidding led to higher than expected prices (under Nash bidding strategies) in both types of auction. Although interesting and encouraging, the results clearly indicate that further research is necessary, particularly with a modified experimental design.     

Anatomy of Russia’s market segmentation1

Based on a relationship between price difference and demand difference among locations, the role of various market frictions in causing segmentation of the Russian goods market is analysed. The spatial sample covers most of Russian regions (70 of the 89); the data are annual, spanning 1992 to 2000. Spatial disconnectedness of regions is found to be responsible for about 70 percent of the average price differential, while the rest is caused by ‘artificial’ impediments to market integration such as regional protectionism, organized crime and intra‐region shipping conditions.     

The impacts of China’s exchange rate regime reform in 2005: A counterfactual analysis

This paper empirically evaluates the impacts of China’s exchange rate regime reform in 2005 on its macroeconomy. We propose to use a new counterfactual policy evaluation method that is robust to the choice of control group. Using the new method, we find that China’s exchange rate regime reform in 2005 mildly reduces the Consumer Price Index, has a substantial damping effect on export, significantly increases employment, and has negligible impact on industrial production.     

Designing effective transfers: Lessons from India’s school meal program

We estimate attendance gains for primary school children from a cost‐neutral change in the design of India’s school meal program. Municipal schools in the capital region of Delhi shifted from packaged food to cooked meals in 2003, with no change in payments to meal providers. Using the staggered implementation of this transition and child‐level panel data, we estimate a 3 percentage point increase in average monthly attendance, with large effects for early grades. We also find that girls are more responsive to the cooked meals, but because they attend morning schools, whereas boys attend afternoon schools, this may simply reflect benefits from better‐timed meals. Our study illustrates how better‐designed transfers can improve outcomes within tightly constrained budgets.     

An empirical evaluation of China’s monetary policies

This paper investigates the responsiveness of the Chinese government’s monetary policies in terms of the money supply and interest rates to economic conditions and the effectiveness of these policies in achieving the goals of stimulating economic growth and controlling inflation. We analyze the responsiveness and effectiveness by estimating the Taylor rule, the McCallum rule, and a vector autoregressive model using quarterly data in the period of 1992-2009. The results show that, overall, the monetary policy variables respond to economic growth and the inflation rate, but the magnitudes of the responses are much weaker than those observed in market economies. Money supply responded actively to both the inflation rate and the real output and had certain effects on the future inflation rates and real output. The official interest rates, on the other hand, responded passively to the inflation rate and did not respond to the real output. They do not have any effect on future inflation rates and real output either.     

The driving forces behind China’s growth1

The main objective of this article is to disentangle the determinants of the Chinese economic growth that occurred from 1965 to 2000. We have explored, first, the time series properties of the growth rates of gross domestic product and labour productivity with an extended battery of unit‐root tests. Then, in a multivariate setting, we use the VAR model methodology to provide evidence that physical and human capital accumulation, R&D expenditure, openness and competitiveness are the main drivers of output, labour productivity and total factor productivity growth in the long run. Additionally, we also show that although China has not yet converged to its long‐run equilibrium, it is in the process of catching up. These results are more consistent with some versions of the endogenous growth models than with Solow‐type models of growth, since they support active strategies of economic policy to stimulate economic growth and catching up with more advanced economies.