Revisiting Cash Endowment and House Money Effects in an Experimental Auction of a Novel Agri‐food Product in the Philippines

This study explores the effect of varying cash endowments on bidding behavior in auction experiments conducted in a developing country. Our results suggest that cash endowment levels can have different effects on bidding behavior under second price auction and random nth price auction. In contrast to past studies conducted in developed countries, we generally do not see the presence of positive house money effect in our results. If behavior varies significantly as the cash endowment is varied, then care must be taken when designing auction experiments or when comparing results to other experimental results and theoretical predictions.     

Competitive bidding with a bid floor

We study competitive bidding with an explicit bid floor, motivated by minimum wage legislation and minimum labor standards. We derive the equilibrium strategies in, and compare the expected procurement costs among, the first‐price, second‐price, English, and Dutch auctions in a private‐cost model. For the English auction, we also consider a variant in which each seller can terminate the auction by jumping down to sell at the price floor. We find that the first‐price auction and the aforementioned jump‐down English auction lead to a lower expected procurement cost than under the second‐price auction and the standard English auction.     

Earnings Forecasts and Price Efficiency after Earnings Realizations: Reduction in Information Asymmetry through Learning from Price*

When information asymmetry is a major market friction, earnings forecasts can lead to higher price efficiency even after the information in forecasts completely dissipates upon earnings realizations. We show this in an experimental market that features information asymmetry (i.e., some traders possess differential private information). Earnings forecasts reduce information asymmetry and lead to prices that reflect a greater amount of private information. Traders can learn more about others' information from prices. This information learned from past prices continues to reduce information asymmetry and improve price efficiency even after earnings realizations. We contribute to the disclosure literature by showing the evidence that the learning‐from‐price effect amplifies the impact of public disclosure on price efficiency.     

Multiunit Auctions in Which Almost Every Bid Wins

We consider multiunit auctions in which there are enough units so that each bidder but one wins every unit on which he bids. We characterize the equilibrium bidding strategy for three different payment rules: the pay-your-bid auction, the uniform-price auction in which the price equals the lowest winning bid, and the uniform-price auction in which the price equals the highest losing bid. We also consider the Vickrey pricing rule. In the case we examine, the auctions are all efficient and thus are revenue equivalent. The equilibria illustrate several phenomona that cannot arise in single-unit auctions. Even though the auctions are expected-revenue equivalent, different bidders may end up paying very different amounts. Also, in contrast to single-unit auctions, changing the seller's reservation price affects revenues, even if it remains below the lowest possible value to bidders.     

Competition and collusion in a government procurement auction market

This paper tests the structure performance hypothesis by examining a highway construction industry in Florida. In the first-price sealed bid auction literature, there is little evidence on how many bidders are required for these markets to be competitive. Two different indicators are used to capture the transition from collusion to competition—a discontinuous effect of the number of bidders on winning bid price, and an associative effect of repeat bidding of a contractor with the same set of firms. The results suggest that winning bids decrease as the number of bidders rises until there are about six to eight firms. Since subsequent entry has no effect on the winning bid price, it is concluded that the highway construction market becomes competitive with about eight bidders.     

The Effect of Alternative e-Prices on eBay Book Auctions

This paper uses the usual eBay auction variables and some data from ABE and Amazon, namely, lot size and the alternative e-price, the lowest price for a given book on a given site, to examine in the question of how information from ABE and Amazon affects eBay auction outcomes. We find that although lot-size sometimes affects bids and final sale price, the alternative e-price effects are more important. Sellers on eBay set their minimum prices below the alternative e-prices, but the closer the minimum price is set to the alternative e-price, the lower the final sale price. Decomposing this result into bidding versus final sale price per se effects, our evidence suggests that the primary comparison shopping effect is on bidding behavior.     

Learning in Sequential Auctions

The importance of information transmission and learning is studied in a model of a sequential auction in which bidders have independent private values. In the course of the auction, information about the bidders' values becomes available as winning bids are revealed. From this, bidders learn about their opponents' types. A more subtle effect of information is that bidders anticipate the generation of information and take this into account in the first auction. The equilibrium in this model is contrasted to a scenario in which bidders are unaware of informational effects. It is shown that bidders who are aware of informational effects place lower bids on average and hence have higher payoffs. Properties of the equilibrium price path are studied. Regardless of the outcome of the first auction, the second price is expected to be equal to the first price. Despite this, the probability of a decreasing price sequence depends on the information generated in the first auction. Finally, it is shown that a simultaneous auction, in which informational effects are absent, yields the same expected final allocation as the equilibrium.     

Risk Aversion and the Winner's Curse

This article analyzes an auction in which bidders see independent components of a common prize value. The Nash equilibrium for two rational bidders is shown to be independent of risk attitudes. The information structure allows explicit calculation of an alternative equilibrium in which naive bidders do not correctly discount the value of the prize, contingent on winning, and thus they suffer the winner's curse. Subjects in a laboratory experiment clearly fall prey to the winner's curse; the data conform most closely to the predictions of the naive model. Moreover, the level of risk aversion implied by fitting the naive model is similar to an independent risk aversion measure obtained in a separate (private value) bidding exercise.     

Information Effects in Uniform Price Multi‐Unit Dutch Auctions

We design a multi‐unit descending‐price (Dutch) auction mechanism that has applications for resource allocation and pricing problems. We address specific auction design choices by theoretically and experimentally determining optimal information disclosure along two dimensions. Bidders are either informed of the number of bidders in the auction, or know that it is one of two possible sizes; they also either know the number of units remaining for sale or are unaware of how many units have been taken by other bidders. We find that revealing group size decreases bids, and therefore revenue, if units remaining are not shown. When group size is unknown the price also falls if the number of units remaining is revealed. The most efficient and largest revenue outcome occurs when bidders are not provided information on either group size or units remaining. These laboratory results conform to some directional predictions from our theory, although overbidding is common.     

Mitigating the Influence of Analysts Who Issue Aggressive Stock Price Targets: The Role of Joint Versus Separate Evaluation*

Investors frequently rely on individual analysts' stock price targets. Aggressive price targets often reflect analysts' attempts to strategically influence investors. Therefore, investors' welfare may be compromised if they take aggressive price targets at face value. In this study, we examine conditions under which investors are more likely to infer that analysts who issue aggressive price targets are acting strategically. Investors can evaluate multiple analysts' price targets with or without other related information (e.g., earnings estimates). Investors can also evaluate the information provided by multiple analysts jointly or separately one analyst at a time. Two experiments find that as predicted, when investors evaluate multiple analysts' price targets without earnings estimates, there is no difference in investors' perceptions about whether the aggressive analyst is acting strategically across joint versus separate evaluation. However, also as predicted, when investors evaluate multiple analysts' price targets along with their earnings estimates, investors perceive the aggressive analyst as acting more strategically under joint evaluation than under separate evaluation. Our findings suggest that jointly evaluating multiple analysts' price targets with other related information, such as earnings estimates, can reduce the likelihood that investors would be overly influenced by aggressive analysts.     

Earnings Attribution and Information Transfers

Managers frequently attribute the news in their earnings forecasts to various economic events. Using textual analysis, we identify the economic factors underlying earnings news from press releases. We document a wide range of industry‐wide shocks and firm‐specific actions to which the earnings news in management forecasts is attributed. As expected, earnings attributions significantly affect peer firms’ price reactions to the earnings news. Specifically, earnings news attributed to industry‐wide trends or firm structural changes leads to positive information transfers but earnings news attributed to firm competitive moves triggers negative information transfers. Information transfers are much stronger when each economic factor is mentioned the first time in a given industry‐year. Further analysis reveals that the strength of information transfers varies with firm‐level rivalry within the industry (i.e., similar business strategies, market position, and level of competition).     

Evaluating car license auction mechanisms: Theory and experimental evidence

In Singapore and many fast-growing cities of China, auctions are used to implement a quota system of car ownership. Three such cities where influential auction formats have been developed for allocating car licenses are the Asian metropolises of Singapore, Shanghai and Guangzhou, with other cities following suit. The current paper examines car auction formats both theoretically and experimentally, with the purpose of maximizing social welfare by improving efficiency and reducing misunderstandings. Reaction time is introduced as an essential non-economic factor of model bidding behaviors in these car license auctions. At the theoretical level, this paper finds that reaction time causes inefficient allocations in the Shanghai auction, but not in the Singapore or Guangzhou auctions. The experimental results are consistent with the theoretical prediction that late bids prevail in all of these auction formats, but only lead to inefficient allocations in the Shanghai auction. Additionally, the subjects' reaction time in the Shanghai treatment was scored by conducting a number comparison task, finding a positive correlation between the probability of winning and the reaction time score.     

Multi‐battle Contests: An Experimental Study

We examine behavior of subjects in simultaneous and sequential multi‐battle contests, where each individual battle is modeled as an all‐pay auction with complete information. In simultaneous best‐of‐three contests, subjects are predicted to make positive bids in all three battles, but we find that subjects often make positive bids in only two battles. In sequential contests, theory predicts sizable bids in the first battle and no bids in the subsequent battles. Contrary to this prediction, subjects significantly underbid in the first battle and overbid in subsequent battles. Consequently, instead of always ending in the second battle, contests often proceed to the third battle. Finally, although the aggregate bid in simultaneous contests is similar to that in sequential contests, in both settings, subjects make higher aggregate bids than predicted. The observed behavior of subjects can be rationalized by a combination of multidimensional iterative reasoning and a nonmonetary utility of winning.     

Earnings Non‐Synchronicity and Voluntary Disclosure

Earnings non‐synchronicity reflects the extent to which firm‐specific factors determine a firm's earnings. Prior research suggests that high earnings non‐synchronicity impedes corporate outsiders' ability to process information. This study examines the impact of earnings non‐synchronicity on managers' decisions to provide earnings forecasts. We propose that high earnings non‐synchronicity motivates managers to issue earnings forecasts to reduce information asymmetry between managers and investors and to preempt costly information acquisition by outsiders. Consistently, we find a positive relation between earnings non‐synchronicity and managers' propensity to issue earnings forecasts, particularly long‐horizon forecasts. This positive relation is weaker when earnings are easier to predict based on the firm's earnings history and is stronger when the firm has higher institutional ownership and greater analyst following. We also find that the market's reaction to management forecasts increases with earnings non‐synchronicity. Overall, the evidence suggests that managers voluntarily provide earnings forecasts to alleviate the adverse consequences of earnings non‐synchronicity. These findings provide a more complete picture about the impact of earnings non‐synchronicity on a firm's information environment, and highlight the effect of the nature of information asymmetry on voluntary disclosures.     

Asymmetric Learning from Prices and Post‐Earnings‐Announcement Drift

Motivated by research in psychology and experimental economics, we assume that investors update their beliefs about an asset's value upon observing the price, but only when the price clearly reveals that others obtained private information that differs from their own private information. Specifically, we assume that investors learn from the price of an asset in an asymmetric manner—they learn from the price if they observe good (bad) private information and the price is worse (better) than what is justified based on public information alone. We show that asymmetric learning from an asset's price leads to post‐earnings‐announcement drift (PEAD), and that it generates arbitrage opportunities that are less attractive than alternative explanations of PEAD. In addition, our model predicts that PEAD will be concentrated in earnings surprises that are not dominated by accruals, and it also predicts that earnings response coefficients will decline in the magnitude of the earnings surprises.     

Effects of Information on Consumers' Willingness to Pay for Golden Rice

We examine the effects of information on consumer bidding behavior using a uniform‐price auction with four units supply for golden rice. Our findings show that mean willingness to pay (WTP) bids are highest under positive information, followed by no information, negative information, and unexpectedly lowest with two‐sided information. Participants might have put more weight on the negative when faced with both positive and negative information. There is also a minor difference in WTP with respect to the reference price between positive information and no information. Furthermore, the marginal effect on WTP of positive information vis‐à‐vis no information is minimal. This suggests that the positive information faced by consumers might not be compelling enough to drastically increase WTP bids for a genetically modified product such as golden rice.     

SMP与PAB电力竞价机制的激励性研究

电力市场的两种基本竞价机制为传统的统一边际价竞价机制(SMP机制)和按报价支付的竞价机制(PAB机制)。首先从拍卖角度出发讨论两种竞价机制激励性,并对两种机制下发电商行使市场力的机理进行了深入分析。分析得出,无论是统一边际价竞价机制还是按报价支付的竞价机制都缺乏让发电商按真实成本信息报价的激励相容性,存在发电商虚报高价的现象,影响电力系统的稳定运行和经济调度。因而需要设计一种新的具有激励相容特性的价格机制。     

为何招标采购偏好“低于均价中标法”

低于均价中标法招标机制被广泛应用于各类招标采购中,但其合理性存在大量争议。文章首先在理论上证明了标准低于均价中标法下投标人不存在随真实成本严格递增的贝叶斯纳什均衡报价策略,然后基于某大型电力公司的招标采购数据,对投标行为进行实证分析,发现低于均价中标法下投标人报价可以反映其真实成本,且该机制在时间趋势上既可以激励投标人压缩利润,降低采购成本,又可以引导投标人形成稳定的低利润预期,指导投标人报"合理低价",防止"赢者诅咒"现象的发生。以上发现均说明低于均价中标法在业界被广泛应用的合理性,但这种招标机制也易于催生投标人间串谋。文章研究为低于均价中标法的合理使用提出了管理建议。     

Risk attitude in lotteries offering real products and monetary outcomes

Using two auction mechanisms, the second price auction and the Becker, DeGroot, and Marschak mechanism, we examined individuals’ buying and selling bidding patterns in three types of binary lotteries: a lottery offering only real products, a lottery offering only monetary outcomes and mixed lotteries offering both real products and monetary value outcomes. Participants’ willingness to pay and willingness to accept for the product lottery suggest risk neutrality. In contrast, participants’ bidding prices for the monetary and mixed lotteries suggest risk aversion. These findings suggest that an individual's risk attitude depends upon the type of lottery, perhaps indicating a “product illusion.”     

Are Art Auction Estimates Biased?

This article considers whether presale auction estimates are unbiased predictors of price when “no‐sales” are considered utilizing a newly constructed sample of over 500 works by eight early twentieth‐century American artists. Unbiased presale auction estimates in predicting price, while expected, are generally not supported in previous work, but these studies (excepting one) do not include no‐sales in the calculations. In order to study the question, we employ a standard approach that uses an inverse Mills ratio arising from a sample selection probit to correct for selection bias. We find that controlling for selection bias, presale auction estimates appear to be biased downward, and we offer possible reasons for this result.