Asymmetric-valued Spectrum Auction and Competition in Wireless Broadband Services

We study bidding and pricing competition between two spiteful mobile network operators (MNOs) with considering their existing spectrum holdings. Given asymmetric-valued spectrum blocks are auctioned off to them via a first-price sealed-bid auction, we investigate the interactions between two spiteful MNOs and users as a three-stage dynamic game and characterize the dynamic game's equilibria. We show an asymmetric pricing structure and different market share between two spiteful MNOs. Perhaps counter-intuitively, our results show that the MNO who acquires the less-valued spectrum block always lowers his service price despite providing double-speed LTE service to users. We also show that the MNO who acquires the high-valued spectrum block, despite charing a higher price, still achieves more market share than the other MNO. We further show that the competition between two MNOs leads to some loss of their revenues. By investigating a cross-over point at which the MNOs' profits are switched, it serves as the benchmark of practical auction designs

Securities Auctions under Moral Hazard: An Experimental Study

We study, both theoretically and in the lab, the performance of open outcry debt and equity auctions in the presence of both private information and hidden e¤ort in an independent private value setting. We characterize symmetric equilibrium bidding strategies and show that these lead to e¢ cient allocation. More interestingly, the revenue ranking between the debt and equity auctions depends on the returns to en- trepreneurial e¤ort. When returns are either very low or vary high, the equity auction leads to higher expected revenues to the seller than does the debt auction. When the returns to e¤ort are intermediate, we show that debt auctions can outperform equity auctions. We then test these predictions in a controlled laboratory setting and …nd broad support for the comparative predictions of the model.

Approaching Utopia: Strong Truthfulness and Externality-Resistant Mechanisms

We introduce and study strongly truthful mechanisms and their applications. We use strongly truthful mechanisms as a tool for implementation in undominated strategies for several problems,including the design of externality resistant auctions and a variant of multi-dimensional scheduling

Auctions with Anticipated Regret

This paper demonstrates theoretically and experimentally that in first price auctions, overbidding with respect to risk neutral Nash equilibrium might be driven from anticipated loser regret (felt when bidders lose at an affordable price). Different information structures are created to elicit regret: bidders know they will learn the winning bid if they lose (loser regret condition); or the second highest bid if they win (winner regret condition); or no information regarding the other bids. Bidders only in loser regret condition anticipated regret and significantly overbid; in the other conditions bidders did not anticipate regret and hence did not overbid.overbidding, first price auction, anticipated regret

Essays in Behavioral Economics: Applying Prospect theory to Auctions

I explore the implications of reference-dependent preferences in sealed-bid auctions. In the first part, I develop a Prospect theory based model to explain bidding in first-price auctions. I show that bidding in induced-value first-price sealed-bid auctions can be rationalized as a combination of reactions to underlying ambiguity and anticipated loss aversion. Using data from experimental auctions, I provide evidence that in induced-value auctions with human bidders, this approach works well. In auctions with prior experience and /or against risk-neutral Nash rivals where ambiguity effects could be altogether irrelevant, anticipated loss aversion by itself can explain aggressive bidding. This is a novel result in the literature. Using data from experiments, I find that ambiguity effects become negligible in auctions with experienced human bidders against (i) experienced human rivals and (ii) Nash computer rivals, when loss aversion is taken in consideration. The estimates for loss aversion are similar in auctions with human bidders (with or without experience). Next, I extend my approach of anticipated loss aversion to address bidding outcomes in first- and second-price sealed-bid auctions. As shown in first part, the model predicts overbidding in first-price induced-value auctions consistent with evidence from most laboratory experiments. However, substantially different bidding behavior could result in commodity auctions where money and auction item are consumed along different dimensions of the consumption space. Differences also result in second-price auctions. The study thereby indicates that transferring qualitative behavioral findings from induced-value laboratory experiments to the field may be problematic if subjects are loss averse and anticipate such losses at the time of bidding. Finally, I explore the effect of resale or procurement opportunities, to which bidders have heterogeneous market access, on bidding in first- price sealed-bid auctions. My models suggest that in auctions with resale, loss aversion causes underbidding with respect to the risk-neutral-Nash prediction. Bidders with greatest level of market access are least affected by loss aversion and therefore bid closer to the risk-neutral-Nash than bidders with smaller market access. In auctions with procurement, the effect of loss aversion is such that it causes overbidding (underbidding) for bidders with respect to the risk-neutral-Nash. Bidders with greatest level of market access are again least affected by loss aversion and therefore bid much conservatively and closer to the risk-neutral-Nash than bidders with very low market access. If market access is interpreted as a proxy for experience, the predictions of my model are qualitatively similar to the findings in List (2003, 2004). Since these indirect effects are obtained without altering reference-dependent preferences, it raises the possibility that the effects obtained in List (2003, 2004) in field settings may not arise entirely due to the direct effect of experience on reference-dependent preferences. This calls for a more careful reexamination of the underlying issues

Asymmetric information about rivals' types in standard auctions: An experiment

This paper studies experimentally how information about rivals' types affects bidding behavior in first- and second-price auctions. The comparative static hypotheses associated with information about rivals enables us to test the relevance of such information as well as the general predictions of the auction theory, by providing an effective means to control for risk aversion and other behavioral motives that were difficult to control for in previous experiments. Our experimental evidence provides strong support for the theory, and sheds light on the roles of risk aversion and the spite motive in first- and second-price auctions, respectively

Bidding Behavior in Multi-Unit Auctions - An Experimental Investigation

We present laboratory experiments of five different multi-unit auction mechanisms. Two units of a homogeneous object were auctioned off among two bidders with flat demand for two units. We test whether expected demand reduction occurs in open and sealed-bid uniform-price auctions. Revenue equivalence is tested for these auctions as well as for the Ausubel, the Vickrey and the discriminatory sealed-bid auction. Furthermore, we compare the five mechanisms with respect to the efficient allocation of the units.Multi-Unit Auctions, Demand Reduction, Experimental Economics