Equilibria in a multi-object uniform price sealed bid auction with multi-unit demands

In many existing markets demanders wish to buy more than one unit from a group of identical units of a commodity. Often, the units are sold simultaneously by auction. The vast majority of literature pertaining to the economics of auctions, however, considers environments in which demanders buy at most one object. In this paper we derive necessary and sufficient conditions for a set of bidding strategies to be a symmetric monotone Bayes-Nash equilibrium to a uniform price sealed bid auction using the "first rejected bid pricing rule" in an independent private values environment with two-unit demands. In any symmetric monotone Bayes-Nash equilibrium, all bidders submit one bid equal to their higher valuation and one bid lower than their lower valuation. We characterize the equilibrium and derive the exact amount of underrevelation in the lower bid

The Impact of Simple Institutions in Experimental Economies with Poverty Traps

We introduce an experimental approach to study the effect of institutions on economic growth. In each period, agents produce and trade output in a market, and allocate it to consumption and investment. Productivity is higher if total capital stock is above a threshold. The threshold externality generates two steady states – a suboptimal poverty trap and an optimal steady state. In a baseline treatment, the economies converge to the poverty trap. However, the ability to make public announcements or to vote on competing and binding policies, increases output, welfare and capital stock. Combining these two simple institutions guarantees that the economies escape the poverty trap

An Experimental Study of Decisions in Dynamic Optimization Problems.

In this paper we use an experimental approach to study the decisions of human subjects who are given cash incentives to solve a particular representative agent dynamic model widely studied in macroeconomics. In a representative agent dynamic model, an economy is modelled as a single decision maker, who maximizes the discounted utility of consumption over the appropriate time horizon. The assupmtion of a single decision maker in the economy removes complications resulting from the existence of multiple agents, such as inefficiencies resulting from strategic behavior or externalities, and technical difficulties arising from the aggregation of preferences.OPTIMIZATION ; DECISION MAKING ; MACROECONOMICS

Rate-of-Return Dominance and Efficiency in an Experimental Economy.

One of the main challenges for monetary economics is to explain the use of assets that are dominated in rate-of-return as media of exchange. In this paper, we use experimental methods to study how a fiat money might come to be used in transactions when an identically marketable, dividend-bearing asset, a consol, is also available.EXPERIMENTS ; ECONOMICS ; MONEY

Does Reciprocity Persist Over Time?

We report the results from three distinct experiments, conducted in the Netherlands and in the United States, which extend the Gift-Exchange paradigm (Fehr et al., 1993; Fehr et al., 1997) for the study of worker-employer relationships. We focus on the effect of long time delays between the time at which workers learn their wage and when they choose their effort level, on the relationship between wage and effort. We compare effort choices made on the same day workers learn their wage, with those made several weeks afterward. While the average effort chosen is the same under the two time lags, a positive and significant relationship between wage and effort appears consistently only in the short-run, while in the long-run, the relationship is weaker and less consistent. We also find that only workers who receive a wage equal to or below their self-reported fair wage exhibit significant reciprocal behavior, a pattern that we interpret as revealing negative rather than positive reciprocity in worker decisions. Using a new technology that tracks facial expressions called NoldusTM FaceReader, we find that the emotion of anger is associated with reciprocal responses in the short-run, but this association is weaker in the long-run