Experimental Auction Procedure: Impact on Valuation of Quality Differentiated Goods

Despite increased use of experimental auctions, a myriad of different procedures are being employed without formal consideration of how the procedures might affect results. This study investigates the effect of several procedural issues on valuation estimates from experimental auctions. Results indicate the second price auction generates higher valuations than English, Becker–DeGroot–Marschak (BDM) , and random n th price auctions, especially in latter bidding rounds, and that random n th price auction yields lower valuations than English and BDM auctions. We find that endowing subjects with a good prior to eliciting bids can have an impact on valuations, but the effect varies across auction mechanism.     

Monitoring costs as a basis for the dispersion of firm ownership

This paper proposes a model of endogenous shareholder dispersion. We find ownership structure causes variance in firm value, not vice versa, and contra to Demsetz and Lehn (1985). Conditions are also identified where increases in ownership dispersion maximize firm value, contra to Shleifer and Vishny (1986). The model suggests that ownership dispersion is a dynamic phenomenon that may change with interest rates or the set of alternative uses of firm resources. The conclusion is that there is not likely to be one ‘best’ structure of firm ownership, either for an individual firm over time or for all firms at a single point in time.     

What Do Returns to Acquiring Firms Tell Us? Evidence from Firms That Make Many Acquisitions

We study shareholder returns for firms that acquired five or more public, private, and/or subsidiary targets within a short time period. Since the same bidder chooses different types of targets and methods of payment, any variation in returns must be due to the characteristics of the target and the bid. Results indicate bidder shareholders gain when buying a private firm or subsidiary but lose when purchasing a public firm. Further, the return is greater the larger the target and if the bidder offers stock. These results are consistent with a liquidity discount, and tax and control effects in this market.     

Discrete time dynamics in a random matching monetary model

Summary. Under take-it-or-leave-it offers, dynamic equilibria in the discrete time random matching model of money are a “translation” of dynamic equilibria in the standard overlapping generations model. This formalizes earlier conjectures about the equivalence of dynamic behavior in the two models and implies the indeterminacy of dynamic equilibria in the random matching model. As in the overlapping generations model, the indeterminacy disappears if an arbitrarily small utility to holding money is introduced. We introduce a different pricing mechanism, one that puts into sharp focus that agents are forward-looking when they interact. Received: January 18, 2001; revised version: May 25, 2001     

Estimation of linear models with crossed-error structure

Sufficient conditions are presented under which the generalized least-squares estimator, with estimated covariance matrix, is unbiased for the parameters in the crossed-error model and has the same asymptotic distribution as the generalized least-squares estimator. The model permits the presence of independent variables that are constant over cross sections or time periods. The model does not require that the variance components associated with cross sections or time periods be positive.     

Fashion statement

We study bilateral matching under private information about agents' characteristics. Assortative matching is the only equilibrium outcome in the absence of private information. When an information friction is present, the matching process can be improved if a payoff-irrelevant variable which we term “fashion” is introduced. Informed agents choose to adopt fashion as a signaling device. If success in matching is observed, other agents can imitate the signal. Thus, for fashion to be useful, it must constantly change. If there are more than two types of agents, both “high” and “low” fashion are needed to facilitate assortative matching.     

Antidumping, signaling and cheap talk

In the United States, there is evidence that domestic non-filing firms do not always support dumping/countervailing duty investigations. Absent other factors, domestic firms have an unambiguous incentive to support petitions filed by other domestic producers. We argue that in cases where the non-complainant firm is not a significant importer or exporter, the most plausible explanation is that non-support acts as a costly signal of private information. Extending the model to allow firms to engage in cheap talk, such signaling can take place even in the absence of an investigation. This result provides an explanation for the puzzling observation that fewer antidumping investigations are filed than one would expect.