A Role for Instructions

The paper is concerned with instructions as a way of setting premises for subsequent decisions in models of teams à la Marschak-Radner, under information diversification. The paper suggests that instructions can bridge people’s differences in knowledge: they do not require mutual understanding between the sender and the receiver as other forms of communication do. In particular, the knowledge of both the team payoff function and the team organisation can be ordered according to hierarchical ranks. First, the paper shows the equivalence between commands and communication in Marschak and Radner (1972). Second, it derives the requirements in terms of knowledge of the members that follow from given structures of task assignment, information diversification and message flows. Hierarchical ranks are shown to correspond to different degrees of intelligibility of the members with respect to the team operations.Instructions, Hierarchy, Knowledge, Decentralisation

Procurement Contracts under Limited Liability

This paper analyses procurement when contractors have limited liability and when the sponsor cannot commit to any specific form of future negotiation. It shows that introducing limited liability enhances competition and thus the likelihood of bankruptcy. Among efficient auctions in which only the winner gets paid, the commonly used first price auction is shown to give the lowest probability of bankruptcy. Finally, it shows that the characterisation of a mechanism minimising the project’s cost results from trading-off bankruptcy costs with informational rents.

Scoping the strengths and weaknesses of different auction and PES mechanisms for Countryside Stewardship

This is the final version. Available from Defra (Department for Environment, Food and Rural Affairs) via the link in this recordThe majority of farmers in England currently receive a fixed fee for managing their land under an agrienvironment scheme (Environmental Stewardship), which is based on an estimate of the typical income forgone by participating. The aim of this research is to explore alternative mechanisms for allocating agri-environment contracts with a view to achieving a more cost-efficient and effective use of funds. The focus is on reverse auctions, whereby farmers opt into a bidding process, offering to manage their land under prescribed management options at a price that more closely reflects their cost of doing so. The researchers have used a combination of laboratory experiments, simulation modelling and farmer workshops to consider the opportunity for efficiency gains, aspects of auction design and farmer responses to auctions. A secondary objective of the work is to explore opportunities for the private sector to engage in agrienvironment actions by leveraging match-funding where there are common goals and mutual benefits for private firms and society. This has entailed a review of the payment for ecosystem services (PES) literature and consultations with a number of relevant private firms. A particular focus for the latter has been the water companies, as they have already established some initiatives on PES around improving water quality

Auctions and bidding: A guide for computer scientists

There is a veritable menagerie of auctions-single-dimensional, multi-dimensional, single-sided, double-sided, first-price, second-price, English, Dutch, Japanese, sealed-bid-and these have been extensively discussed and analyzed in the economics literature. The main purpose of this article is to survey this literature from a computer science perspective, primarily from the viewpoint of computer scientists who are interested in learning about auction theory, and to provide pointers into the economics literature for those who want a deeper technical understanding. In addition, since auctions are an increasingly important topic in computer science, we also look at work on auctions from the computer science literature. Overall, our aim is to identifying what both these bodies of work these tell us about creating electronic auctions. © 2011 ACM.This work was funded in part by HP under the “Always on” grant, by NSF IIS-0329037 “Tools and Techniques for Automated Mechanism Design”, and by IEA (TIN2006-15662-C02-01), OK (IST-4-027253-STP), eREP(EC-FP6-CIT5-28575) and Agreement Technologies (CONSOLIDER CSD2007-0022, INGENIO 2010).Peer Reviewe

Essays on dynamic procurement

This thesis studies the impact of uncertainty and its sequential resolution on the design of procurement mechanisms and, in particular, auctions. Procurement contracts constitute a considerable fraction of output in developed economies. These contracts are typically long-term agreements between a buyer (e.g., the government) and a seller (a supplier of a good or service). This long-term nature of procurement contracts makes renegotiation after the resolution of uncertainty more likely. As a consequence, analysing how these ex-post dynamics affect the ex-ante design of procurement mechanisms becomes very important. The first chapter of this thesis provides a survey and critical review of the theoretical literature on dynamic procurement. It provides a summary of the seminal contributions studying the optimal design of procurement mechanisms and reviews them in light of recent advancements in the theory of dynamic procurement. We describe the issue of procurement from a mechanism design standpoint, the dominant scoring auction, as well as the problems of adverse selection and corruption. The second part of this review describes different channels through which dynamic considerations impact this environment. In particular, we consider issues such as renegotiation and ex-post adaptions, the non-contractible nature of some relationships, repeated interactions, as well as the unique aspects relevant for large and complex projects. In the final part of the first chapter, we explore how the findings from the literature on dynamic procurement help us cast new light on the key static ideas from the seminal papers. The second chapter of this thesis explores the effect of cost-uncertainty on the optimal procurement mechanism. We make three main contributions to the literatures on mechanism design and procurement. First, contributing to the research on dynamic mechanism design, we derive the optimal mechanism for a multidimensional environment with sequential generation of private information. Unlike in the one-dimensional analysis of Eső and Szentes (2007), in our multidimensional dynamic model, the second stage private information does affect the agents’ rent. Second, contributing to the literature on procurement auctions, we show that, unlike in Che (1993), the scoring auction is no longer able to implement the optimal mechanism if contracts are renegotiated in response to the realisations of cost shocks. Finally, the paper introduces a stylised model of procurement with renegotiation that matches several features of observed procurement auctions. The third and final chapter of this thesis addresses a question that naturally emerges from the results of the second chapter. Scoring auctions with renegotiation are not the optimal procurement mechanism for the buyer. However, despite their sub-optimality, scoring auctions are the predominant mechanism used in practice. This chapter addresses the question of optimality within the class of scoring auctions: What is the optimal scoring rule? Furthermore, we quantify the gap between the overall optimal mechanism and the optimal scoring auction in terms of buyer payoffs. In addressing these questions, this chapter introduces a methodology that imposes further restrictions on a direct mechanism optimisation problem to find the optimum among a class of sub-optimal mechanisms. We further extend the result of the second chapter to a discrete type-space. This type-space facilitates an analytic solution to the optimisation problem for the restricted mechanism design problem. Finally, we introduce an auction with reserve-scores and show that it is the optimal scoring auction with renegotiation for discrete type-spaces

Fire in the Records: The Dark Side of Knowledge Management

This paper discusses the implications of buyers and sellers being influenced by the information they receive and how that impacts their decision-making process in the context of a high-value low-frequency transaction (HVLFT). Using an exploratory case study, we explore a dark dimension of knowledge where tacit or explicit knowledge has been lost, distorted, suppressed, misrepresented, or misappropriated resulting in ambiguity and increased risk in decision making. The case study focuses on the decision-making process and the information flow seen from the perspective of different stakeholders involved in a HVLFT. Based on this case study we propose, articulate, and apply a model that explicitly acknowledges the dark side of knowledge. Our findings suggest the need for the application of convergent technologies to ameliorate the risk and asymmetricity caused by the dark side of knowledge and enhance governance particularly in the context of HVLFT

Regulated MAS: Social Perspective

This chapter addresses the problem of building normative multi-agent systems in terms of regulatory mechanisms. It describes a static conceptual model through which one can specify normative multi-agent systems along with a dynamic model to capture their operation and evolution. The chapter proposes a typology of applications and presents some open problems. In the last section, the authors express their individual views on these mattersMunindar Singh’s effort was partially supported by the U.S. Army Research Office under grant W911NF-08-1-0105. The content of this paper does not necessarily reflect the position or policy of the U.S. Government; no official endorsement should be inferred or implied. Nicoletta Fornara’s effort is supported by the Hasler Foundation project nr. 11115-KG and by the SER project nr. C08.0114 within the COST Action IC0801 Agreement Technologies. Henrique Lopes Cardoso’s effort is supported by Fundação para a Ciência e a Tecnologia (FCT), under project PTDC/EIA-EIA/104420/2008. Pablo Noriega’s effort has been partially supported by the Spanish Ministry of Science and Technology through the Agreement Technologies CONSOLIDER project under contract CSD2007-0022, and the Generalitat of Catalunya grant 2009-SGR-1434.Peer Reviewe

Identification and realisation of the benefits of participating in an electronic marketplace : An interpretive evaluation approach

Electronic marketplaces have proliferated as use of the Internet has become widespread in business. A rapid growth in the number of marketplaces, followed by a period of stringent consolidation, as market makers develop a greater understanding of effective business models, has resulted in a climate of uncertainty and confusion. As with many aspects of e-commerce the drive towards participation is fuelled less by strategy planning than by a fear of lagging behind competitors or losing first mover advantage. In this climate of uncertainty organisations often bypass effective evaluation of the benefits that can be realised from participation in e-marketplaces, thereby exacerbating the process facing them and hampering effective decision-making. Evaluation is perceived as a fraught subject within the Information System field, and particularly within the business community which adheres to tried and trusted, albeit often inappropriate, methods such as financial or technical evaluation. The difficulties involved in effective evaluation of systems are well documented; these will increase as systems become more pervasive throughout organisations and those of their trading partners. Calls for a more holistic approach to evaluation are increasing, based on a developing appreciation of interpretive methods of research within the Information Systems discipline. However, the understanding that the social, political and cultural factors affecting and organisation have an impact on the uses and advantages of systems is by no means universal, and empirical evidence of this view is only slowly emerging. This research examines the benefits that can be realised from participation in an electronic marketplace by taking an interpretive approach to the evaluation. It examines the nature of electronic marketplaces to provide clarity to a confused and dynamic environment. The study then focuses on the development of evaluation studies within the IS discipline to identify how an effective evaluation method for assessing the benefits of e-marketplace participation can be achieved. An empirical examination of an organisation’s participation in an electronic marketplace is used to identify the benefits that are realisable and the issues that impact on them. The case study is conducted through an interpretive lens, using a content, context, process (CCP) approach based on existing IS literature. This enables a crucial understanding of the internal and external environments influencing the organisation and its realisation of potential benefits. To allow for the range of interpretations and reflections required to fully address the complexity of the issues involved in such a case study, a variety of research influences such as dialect hermeneutics, critical realism and case study theory are drawn into the research model. The case study organisation’s motivation for participating in an e-marketplace was primarily cost savings. Over the two years of the study, several more potential benefits were identified, such as supply chain efficiencies, greater market awareness and a widening of the supplier base. However, the organisation’s commitments to its local and regional communities, its need to retain status and some consideration of existing relationships needed to be balanced against the gains that might be realised. In some cases the organisation chose to forgo a potential benefit in favour of socially or politically motivated actions. Cultural factors also influenced their actions, particularly as they moved towards extending participation in the marketplace to gain from a global sourcing strategy. The contribution of this research lies in two areas. Firstly, it was existing evaluation literature to development a framework for the evaluation of benefits in the complex area of electronic marketplaces, thereby extending and informing the call for more inclusive and interpretive evaluation studies. Secondly, the research contributes empirical evidence to support the recognition of benefits to be gained from electronic marketplaces and shows how the realisation of the economic benefits is impacted by the social, political and cultural factors that influence an organisation

Logistics and the management of information flow

Information flow is a crucial component of activities in the logistics area. Each flow of raw materials and goods is also accompanied by the flow of information. Unlike the movement of goods, the flow of information is always two-directional. Information flow is a necessary guarantee for the movement of goods in the economy. Additionally, information which is passed at the end of the logistic process is a confirmation of the delivery. The aim of this study is the presentation of conditions referring to the management of information flow in different aspects of logistic activities. The flow of information in logistics supports the collaboration between a supplier and a recipient of goods, it connects individual links in the supply chain. As there is the need for efficient and quick transfer of all information available in an enterprise, cutting-edge information systems are commonly used in each of the areas of logistic activities. Contemporary IT solutions applied in the area of logistics help to increase the process speed and information accessibility. Logistics is a type of activity which shows in this scope great willingness and effectiveness of the implementation of innovative solution