Designing Multi-unit Multiple Bid Auctions: An Agent-based Computational Model of Uniform, Discriminatory and Generalised Vickrey Auctions

Multi-unit auctions are being used by public agencies to allocate resources and to purchase services. These auctions resolve the lumpy bid problem inherent in single-bid auctions by allowing bidders to submit a supply or demand schedule. However, the choice of pricing formats for multi-unit auctions is controversial. Neither economic theory nor laboratory experiments depict a complete picture of how alternative pricing formats perform in terms of budgetary or allocative efficiency. This paper constructs an agent-based computational model to compare uniform, discriminatory and generalised Vickrey pricing formats under different degrees of competition and heterogeneity in the bidder population.     

Bid Functions in Auctions and Fair Division Games: Experimental Evidence

In auctions a seller offers a commodity for sale and collects the revenue. In fair division games the object is collectively owned by the group of bidders who equally share the revenue. We run an experiment in which the participants face four types of allocation games (auctions and fair division game under two price rules, first– versus second–price rule). We collect entire bid functions rather than bids for single values and investigate price and efficiency of the different trading institutions. We find that the first–price auction is more efficient than the second–price auction, whereas economic rationality assuming heterogeneous bidders suggests the opposite. Furthermore, we study the structure of individual bid functions.     

Numerical Computation of Equilibrium Bid Functions in a First-Price Auction with Heterogeneous Risk Attitudes

We use numerical methods to compute Nash equilibrium (NE) bid functions for four agents bidding in a first-price auction. Each bidderi is randomly assigned:r _i [0,r _max], where 1 –r _i is the Arrow-Pratt measure of constant relative risk aversion. Eachr _i is independently drawn from the cumulative distribution function (·), a beta distribution on [0,r _max]. For various values of the maximum propensity to seek risk,r _max, the expected value of any bidder's risk characteristic,E (r _i ), and the probability that any bidder is risk seeking,P (r _i > 1), we determine the nonlinear characteristics of the (NE) bid functions.     

Collusion, Delegation and Supervision with Soft Information

This paper shows that supervision with soft information is valuable whenever supervisors and supervisees collude under asymmetric information and proceeds then to derive an Equivalence Principle between organizational forms of supervisory and productive activities. We consider an organization with an agent privately informed on his productivity and a risk averse supervisor getting signals on the agent's type. In a centralized organization, the principal can communicate and contract with both the supervisor and the agent. However, these two agents can collude against the principal. In a decentralized organization, the principal only communicates and contracts with the supervisor who in turn sub-contracts with the agent. We show that the two organizations achieve the same outcome. We discuss this equivalence and provide various comparative statics results to assess the efficiency of supervisory structures.     

Collusion, Exclusion, and Inclusion in Random-Order Bargaining

This paper examines the profitability of three types of integration in a cooperative game solved by a random-order value ( e.g. the Shapley value). Collusion between players  i  and  j  is a contract merging their resources in the hands of one of them, say  i  . This contract can be represented as a combination of exclusion, which lets  i  exclude  j  's resource but not use it himself, and inclusion, which lets  i  use  j  's resource but not exclude  j  from it. This representation yields a third-difference condition on the characteristic function that determines the profitability of collusion, generalizing existing results for specific games. Namely, collusion is profitable [unprofitable] when the complementarity of the colluding players is reduced [increased] by other players.     

Complementarities among Capability, Transaction and Scale-Scope Considerations in Determining Organizational Boundaries

The purpose of this paper is to discuss the conditions under which capability, transaction and scale considerations interact in determining organizational boundaries. It is argued that this interaction contributes to explaining the individual firm's performance and growth whenever cognitive competence is limited, radical uncertainty is present, some inputs and processes are indivisible and complementary, and some relevant knowledge is tacit, non-transmittable and characterized by set-up processes with high fixed costs. Under the above conditions, which are becoming increasingly important with the spread of the knowledge-based economy, the growth of the firm can be regarded as a consequence of managerial ability to set a strategy that exploits the mutually reinforcing advantages provided by the organizational coordination of capabilities, transactions and scale of processes, while limiting counteracting forces deriving from errors of strategy that are due to cognitive inertia and myopia, unclear allocation of rights and responsibilities, errors in identifying aims, imprecision in performance measuring, difficulty in focusing incentives, influence activities and problems of internal communication.     

Auctions with Anticipated Emotions: Overbidding,Underbidding, and Optimal Reserve Prices*

The experimental literature has documented that there is overbidding in second‐price auctions, regardless of the valuations of bidders. In contrast, in first‐price auctions, there tends to be overbidding for large valuations, but underbidding for small valuations. We show that the experimental evidence can be rationalized by a simple extension of the standard auction model, where bidders anticipate (constant) positive or negative emotions caused by the mere fact of winning or losing. Even if the emotional (dis‐)utilities are very small, the revenue‐maximizing reserve price might be significantly different from the standard model. Moreover, decreases with the number of bidders.     

Monotonic Knowledge Models,Cycles, Linear Versions and Auctions with Differential,Finite Information

In games of incomplete information where each player's information is represented by a partition of the state space, this paper presents a characterisation of monotonic models in terms of connected partitions and another in terms of versions . A model is monotonic if and only if there is a linear version, and this is true if and only if there is a real‐valued function on the state space such that every partition of the model is connected with respect to this function. These results help us understand the strength of the connectedness assumption on common‐value, second‐price auctions with differential, finite information. We offer a simple sufficient condition for non‐monotonicity to check if models are monotonic.     

Intergenerational Complementarities in Education,Endogenous Public Policy,and the Relation Between Growth and Volatility

We construct an overlapping generations model in which parents vote on the tax rate that determines publicly provided education and offspring choose their effort in learning activities. The technology governing the accumulation of human capital allows these decisions to be strategic complements. In the presence of coordination failure, indeterminacy and, possibly, growth volatility emerge. This indeterminacy can be eliminated by an institutional mechanism that commits to a minimum level of public education provision. Given that, in the latter case, the economy moves along a uniquely determined balanced growth path, we argue that such structural differences can account for the negative correlation between volatility and growth.     

Collusion in Dynamic Bertrand Oligopoly with Correlated Private Signals and Communication

This paper studies collusion in repeated Bertrand oligopoly when stochastic demand levels for the product of each firm are their private information and are positively correlated. It derives general sufficient conditions for efficient collusion through communication and a simple grim-trigger strategy. This analysis is then applied to a model where the demand signal has multiple random components which respond differently to price deviations. In this model, it is shown that the above sufficient conditions hold if idiosyncratic noise terms are sufficiently small. Journal of Economic Literature Classification Numbers: C72, D82.     

Equitable and Efficient Federal Structures with Decentralized Leadership,Spillovers, and Attachment of Heterogeneous Labor

Relying on differentiability assumptions and on conditions that guarantee interior solutions, we show that a federation featuring decentralized leadership, interregional spillovers, and labor attachment allocates resources efficiently under two sets of circumstances. The first is when the center is Rawlsian. The second is when individual utilities are quasi‐linear, regional welfare functions are Benthamite, and the center's objective function is a Bergson–Samuelson transformation of regional welfare levels, which also satisfies conditions needed for the center to view regional welfare levels as normal goods. In both sets of circumstances, efficient behavior follows from incentive equivalence promoted by the center's egalitarian transfers.     

异质信念、通货幻觉和我国房地产价格泡沫

房地产基本价值是由其未来的现金流(即租金)和贴现率决定的,异质信念与通胀幻觉分别从投资者对房地产未来现金流分布的信念差异和对贴现率的估计偏差两方面解释了房地产价格泡沫的形成机制。本文基于1994~2010年中国房地产市场季度数据,利用时变现值模型估计中国房地产市场的基本价值,进而给出房地产价格泡沫,并检验中国房地产价格泡沫的形成机制。研究发现,异质信念和通胀幻觉都勾勒出了中国房地产价格泡沫形成的画面,但相对于通胀幻觉,异质信念是中国房地产价格泡沫形成的主导因素。     

Population,competition, innovation,and economic growth with and without human capital investment

This paper analyzes how population and product market competition (PMC) may interact with each other in affecting the pace of economic growth. The impact of a change in population (size or growth) and in the degree of PMC on productivity growth may vary depending on the presence of human versus physical capital investment, the way in which individuals may purposefully invest in human capital, the type of input used in the uncompetitive sector, the form of households’ intertemporal utility, and whether PMC (measured by the degree of substitutability between differentiated intermediates) is disentangled or not from the input shares in aggregate income. It is found that a growth model with human capital accumulation à la Lucas (J Monet Econ 22(1):3–42, 1988) and a continuum of degrees of intertemporal altruism can predict an ambiguous link between population and economic growth rates, in line with the available empirical evidence. The article also analyzes the conditions under which market structure (monopoly power) and population (size or growth) may be complementary to each other in the process of long-run economic growth.     

异质性雇用成本、社会福利与劳动力市场结构性改革

通过扩展Blanchard和Galí(2010)的雇用成本模型,文章构建了一个包含正规部门与非正规部门的异质性雇用成本的NKMP-DSGE模型.外生冲击的贝叶斯脉冲响应函数表明,正规部门就业与非正规部门就业对于同一外生冲击具有不同的反应,这意味着考虑不同部门的异质性是合理的.社会福利分析的结果指出,非正规部门的存在尽管通过降低名义价格刚性而改善了社会福利,但通过失业回滞却导致了社会福利的恶化;而且总体而言恶化了社会福利.这一发现为我国当前正在积极推行的劳动力市场结构性改革提供了理论依据.在此基础上,文章进一步考察了劳动力市场结构性改革的效应.研究发现,不管是长期效应还是短期效应,改革都有利于改善劳动力市场的表现.     

Living Standard,Social Welfare,and the Redistribution of Income in a Heterogeneous Population

The paper considers the redistribution of income in a population of households which may differ by type. The redistribution is based on (differences in) living standard and a principle of between‐type‐progressive transfers (BTPT). We characterize the relationship between a social welfare ordering satisfying the BTPT principle and the concept of living standard the principle is based on. It turns out that there is a close link: The ordering of living standard can be derived from the social welfare ordering. Conversely, the class of welfare orderings fulfilling the BTPT principle for a given concept of living standard can be completely described.     

Bid dispersion,competition and wage regulation: some field evidence from public contract bidding in British Columbia

The paper uses data from British Columbia to show that bid dispersion (the difference between the winning and next-lowest bids) in public school construction contract bidding is very compact, and that it varies inversely with the degree of competition. It also examines the impact of the Skill Development and Fair Wage Law (SDFWP), which promulgated wage scales and required contractors to pay them in public construction projects, on the bid dispersion. Multivariate analysis shows that bid dispersion declined after SDFWP. One possible interpretation of this result is that the contractors became less prone to the winner's curse following the SDFWP.     

Monetary Policy,Financial Frictions,and Heterogeneous R&D Firms in an Endogenous Growth Model*

Motivated by empirical facts, I construct an endogenous growth model in which heterogeneous research and development (R&D) firms are financially constrained and use cash to finance R&D investments. I also examine the optimal monetary policy. The effects of financial constraint crucially depend on whether R&D firms are homogeneous or heterogeneous regarding R&D productivity. If R&D firms are homogeneous, then the zero nominal interest rate (i.e., the Friedman rule) is always optimal under severe financial constraint. Heterogeneity in R&D productivity leads to the opposite result. With heterogeneity, severe financial constraint makes the strictly positive nominal interest rate welfare-improving under a plausible condition.     

Individual and Collective Choice and Voting in Common Pool Resource Problem with Heterogeneous Actors

In this paper we investigate the effects of heterogeneity in common pool resource (CPR) problems. We examine whether heterogeneity impedes or facilitates coordination on an efficient use of a CPR by proposing and voting on allocation schemes. In a full information design we compare extractions and voting behavior in heterogeneous and homogeneous groups. If the CPR is extracted individually, we find no difference in efficiency between heterogeneous and homogeneous groups. However, when groups can vote on allocation schemes, homogeneous groups are more likely to reach an efficient agreement than heterogeneous groups.     

A Framework for the Simultaneous Measurement of Spatial Variation and Temporal Movement in Prices in a Heterogeneous Country: The Dynamic Household Regional Product Dummy Model

This paper contributes to the growing literature on spatial prices in large heterogeneous countries. While the literatures on spatial variation and temporal movement in prices have grown in parallel, this study marks a departure by providing a unified treatment and proposing a comprehensive framework that allows both approaches. The proposed model is based on twin extensions of the household version of the “country product dummy model” by allowing for a dynamic stochastic specification and interdependence of spatial prices of geographically adjacent regions. Tests of temporal stability and regional independence of the estimated spatial prices are proposed and applied in this paper. The paper shows that the introduction of an autoregressive error process of order one, AR(1), improves the efficiency of the estimates of parameters, urban‐rural and temporal price indices under certain conditions. The Indian application points to a rich potential for using the proposed framework in cross country comparisons such as the International Comparison Program (ICP) exercises.     

Trade,Migration, and Inequality in a World without Factor Price Equalization

The behavior of trading economies in the absence of factor price equalization is not well understood, although empirical evidence against factor price equalization is overwhelming. We map regions of diversification and specialization for competitive world economies with different factor endowment partitions. Goods and factor price responses as economies move within and across different regions of specialization are explored using a series of novel diagrams. The usefulness of endogenizing patterns of specialization is illustrated by considering the impact on inequality of migration flows (such as US–Mexico), the substitutability of trade and migration, and the impact of the entry of a large unskilled labor‐intensive economy (such as China) on factor prices and factor flows.