Second-price common-value auctions under multidimensional uncertainty

The literature has demonstrated that second-price common-value auctions are sensitive to the presence of asymmetries among bidders. In a two-bidder model, Bikhchandani [1988. Reputation in repeated second-price auctions. J. Econ. Theory 46, 97–119] has shown that if it is common knowledge that one bidder has a disadvantage compared to her opponent, that bidder (almost surely) never wins the auction. Employing a similar two-bidder model, this paper shows that this result does not carry over when one allows for two-sided uncertainty. In such case, in every equilibrium, the disadvantaged type bidder needs to win the auction with strictly positive probability. We then solve for the equilibria in two cases, one with two types and another with a continuum of types, and we show that they converge to the symmetric equilibria of the corresponding symmetric auctions. We thus reestablish a lost linkage in the analysis of common-value and almost-common-value auctions.Publicad

Second-price common-value auctions under multidimensional uncertainty

The literature has demonstrated that second-price common-value auctions are sensitive to the presence of asymmetries among bidders. Bikhchandani (1988) has shown that if it is common knowledge that a bidder has a disadvantage compared to her opponent, this bidder (almost surely) never wins the auction. This paper is the first to show that this result does not carry through when one allows for two-sided uncertainty. Whe show that even if the probabilities that one of the bidders is advantaged while the other one is disadvantaged are arbitrarily large, in every equilibrium, the disadvantaged bidder needs to win the auction with strictly positive probability. We then solve for the equilibria in two cases (one with two types and another with a continuum of types) and we characterize their expected revenues properties. We find that although they underperform relative to "comparable" symmetric auctions, they perform much better than what it is "assumed" in the literature

A non-welfarist solution for two-person bargaining situations.

In this paper we present a non-welfarist solution which is applicable to a broad spectrum of twoagent bargaining problems, such as exchange economies, location problems and division problems. In contrast to welfarist bargaining solutions, it depends only on the agents' preferences. not on their specific utility representation, and takes explicitly into account the underlying space of alternatives. We offer a simple sequential move mechanism, without chance moves, that implements our solution in subgame perfect equilibrium. Moreover, an axiomatic characterization of the solution is provided. It is shown that the solution coincides with the Kalai-Rosenthal bargaining solution after choosing a suitable utility representation of the preferences. When applied to exchange economies with equal initial endowments for both agents, the solution generates envy-free, Pare to efficient egalitarian equivalent allocations.Bargaining; Nash program; Welfarism; Non-welfarism; Exchange economies; Location problems; Implementation;

Are Disadvantaged Bidders Doomed in Ascending Auctions?

A bidder is said to be advantaged if she has a higher expected valuation of the auction prize than her competitor. When the prize has a common-value component, a bidder competing in an ascending auction against an advantaged competitor bids especially cautiously and, hence, the advantaged bidder wins most of the time. However, contrary to what is often argued, a disadvantaged bidder still wins with positive probability, even if his competitor.s advantage is very large and even if the disadvantaged bidder has the lowest actual valuation ex-post. Therefore, the disadvantaged bidder has an incentive to participate in the auction, and the presence of a bidder with a small advantage does not have a dramatic e¤ect on the seller.s revenue.common-value auctions, asymmetric bidders

The effect of female participation on fertility in Spain: how does it change as the birth comes closer.

In this paper we anaIyze the effect of female labor force participation on fertility decisions. We focus on two issues that emerge when estimating such effect: (i) the endogeneity between fertility and participation; and (ii) the period in which participation is measured with respect to fertility. We account for the first problem by using an empirical model based on the assumption that women decide on labor force participation and childbearing in response to incentives provided by prices and incomes. The second issue is addressed exploiting the panel structure of our data (matched EPA files). which allow us to measure women labor force participation at several points in the time preceding a birth. Our results show that it is important to account for the endogeneity between participation and fertility and that women's attitude toward the labour market changes along the pregnancy.Fertility; Femal labor force participation; Endogeneity;

Monk business: an example of the dynamics of organizations.

In this paper we present a dynamic model of an organization. It is shown that the quality of the members of the organization may cycle and that even if the organization promotes excellency, the organization may end up populated by mediocre agents only.Overlapping generations; Quanty organization;

Bidding in a Possibly Common-Value Auction

We analyze a second-price auction with two bidders in which only one of the bidders is informed as to whether the object is valued commonly. We show that any equilibrium strategy of the bidder who is uninformed must be part of an equilibrium when both bidders instead know that the auction is not common value, regardless of the way in which the values are different. We derive su¢ cient conditions for equilibrium existence

An Experimental Test of Design Alternatives for the British 3G / UMTS Auction

In spring 2000, the British government auctioned off licences for Third Generation mobile telecommunications services. In the preparation of the auction, two designs involving each a hybrid of an English and a sealed-bid auction were suggested by the government: a discriminatory and a uniform price variant. We report an experiment on these two designs, and also compare the results to those with a pure English auction. Both hybrids are similar in efficiency, revenue differences disappear as bidders get experienced. Compared to the discriminatory format, the pure English auction gives new entrants better chances.Spectrum auctions, UMTS, experiments

Strategic interaction between futures and spot markets.

There is a literature (e.g., Allaz and Vila, 1992 and Hughes and Kao, 1997) showing that in an oligopolistic context, the presence of a futures market induces firms to use it in order to increase its market share. The consequence of this behavior is that the total quantity supplied by the industry increases, thus making the oligopolistic outcome closer to the competitive equilibrium. In the present work, we propose a model to study the interaction of spot and futures markets that does not imply this pro-competitive effect. The model is the same as in Allaz and Vila in the sense that firms have infinitely many moments to trade in the futures market before the spot market takes place. We analyze the equilibria in the infinite case directly and show that many equilibria emerge in a kind of folk-theorem result (but ours is not a repeated game). The equilibrium in which firms do not use the forward market is particularly robust as it satisfies the most demanding definition of renegotiation-proofuess. Furthermore, if firms are allowed to buy in the futures market, they can sustain the monopolistic outcome in a renegotiation-proof equilibrium (notice that there is only one period in the spot market). We also study the role of information in the model and argue that our results fit better stylized facts of some industries like the power market in the U.K.Futures markets; Cournot competition; Collusion;

Interim efficient mechanisms for a public decision making in a discrete framework.

In this paper. I characterize the set of Bayesian incentive compatible anonymous mechanisms in a discrete public good problem when preferences are private information. With this result in hand, I characterize the set of interim incentive efficient mechanisms as voting schemes in which votes are weighted according to the tax paid by each agent.Public goods; Voting mechanisms; Interim efficiency;