Improvements to transmission expansion planning and implementation :treating uncertainty in commercial operation dates and increasing aunction efficiency

Three proposals contributing to the electricity transmission expansion planning and implementation process are presented in this thesis. The first proposal refers to the use of combinatorial and simultaneous descending auctions to treat the exposure problem and increase the efficiency of multi-item transmission auctions. A simulation framework to quantify potential benefits of using these auctions protocols, for transmission companies and grid users, is proposed. The second proposal refers to an expansion planning methodology that explicitly accounts for uncertainties in facility implementation times while determining the capacity additions and their optimal implementation schedule. In the third proposal, principal-agent theoretic concepts are applied to develop a methodology for the optimal design of winner-selection and risksharing mechanisms, with the goal of managing uncertainties in implementation times of transmission facilities, when competitive processes are used to select the agents to which concessions to implement and operate these facilities are awarded. Classical optimization approaches, notably mixed-integer linear programming, are used in the mathematical formulations that underlie the simulation and analyses carried out for all three proposals; and qualitative conclusions aiming at aiding planners and regulators are drawn from the quantitative results of case studies.Esta tese apresenta três contribuições ao planejamento e implantação da expansão da transmissão. Primeiro, propõe-se usar leilões combinatórios e leilões descendentes simultâneos para tratar o problema da exposição em leilões multi-itens de concessões de transmissão, aumentando a eficiência destes leilões, e apresenta-se um arcabouço de simulação para quantificar os benefícios potencias do uso de tais protocolos. Segundo, propõe-se uma metodologia de planejamento da expansão que considera explicitamente incertezas em tempos de implantação de instalações da transmissão ao determinar as adições de capacidade e as datas de início de implantação de ativos. Terceiro, aplica-se conceitos da teoria do agente-principal para propor uma abordagem para otimizar o desenho de mecanismos de seleção do vencedor e de partilha de riscos, de modo a gerir incertezas em tempos de implantação de ativos, no contexto em que mecanismos competitivos são utilizados para selecionar os agentes a que contratos de transmissão implantação são concedidos. Para todas as três propostas, utiliza-se abordagens de otimização clássica, notadamente programação inteira linear mista, para a formulação matemática que subsidia simulações e análises; e retira-se dos resultados numéricos de estudos de casos conclusões qualitativas que subsidiem planejadores e reguladores

Mustang Daily, February 6, 2008

Student newspaper of California Polytechnic State University, San Luis Obispo, CA.https://digitalcommons.calpoly.edu/studentnewspaper/7707/thumbnail.jp

Agents’ Performance and Emotions: An Experimental Investigation

This doctoral thesis is structured in three essays. In the first essay (Chapter 2) I explore the behavioural effects of anxiety on agents’ performance. I hypothesize that a certain level of tension and pressure can induce agents to exert more effort, according to theories of anxiety in psychology. The negative valence associated to this emotion might propose an impairment in performance. On the contrary, the laboratory economic experiment I have run shows that when an anxious mood is induced individuals are more likely to exert more effort. Anxiety leads to performance improvements. In the second essay (Chapter 3) I raise a methodological issue on the use of effort tasks in economic experiments. Effort tasks are usually assumed to lead to similar results. However, the choice of the effort task can significantly drive experimental results. I have conducted an economic experiment where I compare four different effort tasks which give a measure of participants’ performance or investment when they compete for a prize. Results show that there is no equivalence between the types of task applied. The last essay (Chapter 4) is a substantial part of a joint project with Professor Daniel J. Zizzo. We ran an experiment where participants are asked to enter a 2-player prize competition. Each pair consists of a High Type participant, who performs a previous real effort task better, and a Low Type participant, who performs a previous real effort task worse. Participants receive feedback on their performance rank and their opponents’ performance rank. They are also informed about the allocation of an extra monetary reward. Participants are then asked to choose their level of investment. They can also sabotage their opponent. Results show that perceived unfairness of the reward allocation rule, expectations of investment and sabotage, and competitive feelings affect participants’ behaviour in the contest

Essays on lottery contests: theory and experiments

This thesis presents four studies on a variety of lottery contests. A contest is a game in which players incur irreversible expenditure of costly resources to win some valuable reward. The contest success function, which maps the resource investments into corresponding success probabilities, is the mathematical representation of the selection mechanism in a contest. This thesis focuses on lottery contests where chance plays a crucial role in determining the outcome. The first chapter, called “That’s the ticket: Explicit lottery randomisation and learning in Tullock contests” looks at how mere difference in representation can affect behaviour in an experimental lottery contest. A simple lottery contest with a single winner prize is implemented using two different frameworks one more abstract, following convention in majority of existing literature in this field, and one more operational, closely resembling the familiar institution of a lottery. Behaviour in the operational framework is closer to the theoretical prediction and reflects quicker adjustment towards best-responses. The findings have been replicated in two university locations in two continents. The second chapter, “A combinatorial multi-winner contest with package-designer preferences” provides a general framework for modelling a special type of contest that has been discretely studied in the existing literature. This is a highly stylized model of a multi-winner contest characterized by a group lottery contest among overlapping groups with perfect substitution of effort within a group. Best-responses are characterized for any connected network, and equilibrium properties have been discussed for certain types of networks. The third chapter, titled “Equivalent multi-winner contests: An experiment”, shows the strategic redundancy of three multi-winner contest mechanisms and proves outcome equivalence through laboratory implementation. This chapter also argues that such lottery-based multi-winner mechanisms generate similar contest investment as in a single-winner contest for suitable parameter values. The fourth chapter, “In-group and out-group motives in group conflicts: An experimental study”, employs a novel design to distinguish between different group-related attitudes in an inter-group conflict. Depending on the treatment, financial as well psychological consequences for in-group or out-group members are removed by matching current experimental subjects with the pre-recorded decisions made by previously participating subjects. This has been crossed with minimal identity conditions. No significant evidence of group bias is found. Observed behaviour shows higher support for conformity with others in decision-making. Overall, the findings from the three experiments indicate that decision-making patterns in lottery contests are largely unaffected by strategy-preserving procedural variations, but are responsive to representational differences

The Effects of Preference Characteristics and Overconfidence on Economic Incentives

This dissertation is a collection of three independent research papers and three chapters with surveys introducing into the respective literature. The first paper analyses the effects of introducing Inequity Aversion in a Moral Hazard Problem, the second paper is about optimal delegation in groups involved in contests, and the third paper is about the optimal delegation decision of firms who can hire possibly overconfident managers.Incentives; Inequity Aversion; Contracts; Strategic Delegation; Overconfidence

Essays on Empirical Two-Sided Matching Models with Unobserved Heterogeneity

This dissertation studies two structural frameworks in empirical studies of Industrial Organization: two-sided matching models and simultaneous auction/contest models. Both models involve two disjoint sides of players: matching occurs between firms and workers, schools and students, and so forth; in an auction or contest, there always exists an auctioneer or contest designer on one side and bidders or contestants on the opposite. First, empirical studies of two-sided matching markets reveal that sorting patterns between potential employers and employees may be driven by unobserved heterogeneity on both sides and preferences over multidimensional wage contracts. Therefore, in Chapter 2, I study a generalized matching model with Non-Transferrable Utility (NTU), i.e. a two-stage model where employers firstly set wage contracts for their jobs, workers then match with the jobs in a decentralized way. I propose a strategy that exploits the variation in agent- and match-specific characteristics from finite-sized repeated markets to identify and estimate the preference primitives in the presence of two-sided unobserved heterogeneity, assuming employers share a vertical preference over workers. I further suggest a likelihood-based estimation strategy that tackles the dimensionality issue emerging from the existence of global players of the repeated game, and show its performance via Monte Carlo simulation analyses. In Chapter 3, I apply the model and identification method developed in Chapter 2 to study recently fast-growing online labor markets that match skilled labor to short-term jobs using a contest-based mechanism. Despite the anecdotal evidence showing both firms and workers benefiting from largely decreased meeting friction and increased flexibility on the platform, it is economically substantial to quantitatively reveal the preference structure of both parties, which may include unobserved factors to researchers. I, therefore, adopt the two-stage model where firms set wage contracts for their jobs before programmers choose coding projects simultaneously. I then use the identification strategy that exploits the variation in agent- and matchspecific characteristics from finite-sized repeated markets to estimate workers' latent skill levels and jobs' latent complexity levels. Using individual-level data from a leading online tournament-based labor market, TopCoder.com, which matches workers worldwide with short-term software developing tasks, I find a multidimensional preference beyond cash motives when workers consider which jobs to take. Using the results from the estimation, I further study the elements regarding market design that could leverage off the matching mechanisms to improve the total surplus generated from such markets. While this "crowdsourcing" market can be modeled as a matching process between firms with temporary jobs and workers, I would also like to capture the strategic interaction of workers after they match with an individual job. Within the same job, workers exert e ort to win pre-determined cash prizes according to the rank order of their delivered work. This can be naturally modeled in a (multi-prize) contest environment. A central concern is to recover the underlying preferences of workers, which again requires the full knowledge of the unobserved heterogeneity, or types, of both workers and jobs. Chapter 4 develops a new method to identify and estimate primitives in simultaneous contests with multiple prizes. I establish a two-stage game where bidders/contestants first choose one among multiple auctions/contests, then in the second stage, they compete within each auction/contest by submitting their bids simultaneously, contributing their efforts to win over the pre-determined prize based on the rank order. I show that by observing their first-stage choice probability combined with the second-stage bidding strategy, I can non-parametrically identify the joint distribution of unobserved heterogeneity on both sides of the market. I then present an estimation strategy and show the performance of Monte Carlo experiments