Descending Price Optimally Coordinates Search

Investigating potential purchases is often a substantial investment under uncertainty. Standard market designs, such as simultaneous or English auctions, compound this with uncertainty about the price a bidder will have to pay in order to win. As a result they tend to confuse the process of search both by leading to wasteful information acquisition on goods that have already found a good purchaser and by discouraging needed investigations of objects, potentially eliminating all gains from trade. In contrast, we show that the Dutch auction preserves all of its properties from a standard setting without information costs because it guarantees, at the time of information acquisition, a price at which the good can be purchased. Calibrations to start-up acquisition and timber auctions suggest that in practice the social losses through poor search coordination in standard formats are an order of magnitude or two larger than the (negligible) inefficiencies arising from ex-ante bidder asymmetries.Comment: JEL Classification: D44, D47, D82, D83. 117 pages, of which 74 are appendi

Paternal Uncertainty and the Economics of Mating, Marriage, and Parental Investment in Children

We develop a theoretical model of mating behavior and parental investment in children under asymmetry in kin recognition between men and women that provides a microfoundation for the institution of marriage. In the model, men and women derive utility from consumption and reproductive success, which is a function of the number and quality of own offspring. Because of paternal uncertainty, men unlike women may err in investing resources in offspring that is not biologically theirs. As a socially sanctioned commitment device among partners, the institution of marriage reduces this risk by restraining promiscuity in society. Both women and men are shown to benefit from lower levels of paternal uncertainty, as does average child quality because of increased parental investments. As an analytical framework, the model is suitable to study a number of societal, economic, and technological changes in their effects on marriage patterns. A combination of factors is argued to underlie the demise of marriage.Mating, Paternal Uncertainty, Parental Investment, Marriage

Alea Iacta Est: Auctions, Persuasion, Interim Rules, and Dice

To select a subset of samples or "winners" from a population of candidates, order sampling [Rosen 1997] and the k-unit Myerson auction [Myerson 1981] share a common scheme: assign a (random) score to each candidate, then select the k candidates with the highest scores. We study a generalization of both order sampling and Myerson's allocation rule, called winner-selecting dice. The setting for winner-selecting dice is similar to auctions with feasibility constraints: candidates have random types drawn from independent prior distributions, and the winner set must be feasible subject to certain constraints. Dice (distributions over scores) are assigned to each type, and winners are selected to maximize the sum of the dice rolls, subject to the feasibility constraints. We examine the existence of winner-selecting dice that implement prescribed probabilities of winning (i.e., an interim rule) for all types. Our first result shows that when the feasibility constraint is a matroid, then for any feasible interim rule, there always exist winner-selecting dice that implement it. Unfortunately, our proof does not yield an efficient algorithm for constructing the dice. In the special case of a 1-uniform matroid, i.e., only one winner can be selected, we give an efficient algorithm that constructs winner-selecting dice for any feasible interim rule. Furthermore, when the types of the candidates are drawn in an i.i.d.~manner and the interim rule is symmetric across candidates, unsurprisingly, an algorithm can efficiently construct symmetric dice that only depend on the type but not the identity of the candidate.Comment: ITCS 201

Multiple Vickrey Auctions for Sustainable Electric Vehicle Charging

Electric vehicles (EVs) are important contributors to a sustainable future. However, uncontrolled EV charging in the smart grid is expected to stress its infrastructure, as it needs to accommodate extra electricity demand coming from EV charging. We propose an auction mechanism to optimally schedule EV charging in a sustainable manner so that the grid is not overloaded. Our solution has lower computational complexity, compared to state-of-the-art mechanisms, making it easily applicable to practice. Our mechanism creates electricity peak demand reduction, which is important for improving sustainability in the grid, and provides optimized charging speed design recommendations so that raw materials are not excessively used. We prove the optimal conditions that must hold, so that different stakeholder objectives are satisfied. We validate our mechanism on real-world data and examine how different trade-offs affect social welfare and revenues, providing a holistic view to grid stakeholders that need to satisfy potentially conflicting objectives

Incomplete Regulation, Competition and Entry in Increasing Returns to Scale Industries

The paper analyzes the effects of liberalization in increasing returns to scale industries. It studies the optimal regulation of an incumbent competing with an unregulated strategic competitor, when public funds are costly. The model shows a trade off between productive and allocative efficiency. Moreover, the welfare gains of liberalization, as compared with regulated monopoly, are a non monotonic function of the cost of public funds. Finally, in the case of severe cash constraint of the government, incomplete regulation may also dominate full regulation of duopoly.Incomplete Regulation, Asymmetric Information, Incentives, Cost of Public Funds.