Competitive Auctions: Theory and Application

The theory of competitive auctions offers a coherent framework for modelling coordination frictions as a non-cooperative game. The theory represents an advancement over cooperative approaches that make exogenous assumptions about how output is divided between buyers and sellers and about the forces that bring buyers and sellers into local markets. Moreover, unlike price posting models, which fix the terms of trade prior to matching, competitive auction models have a bidding process that allocates the good (or service) to the highest valuation bidder at a price equal to the second highest valuation. Therefore, the competing auction model is more robust to problems in which there are heterogenous valuations. This paper develops the theory of competitive auctions and applies it to a number of practical problems in microeconomics, labor economics, industrial organization, investment theory and monetary economics.

Do marital prospects dissuade unmarried fertility?

Unmarried fertility was a lot lower in the 1970s than in the 1990s. It was also the case that unmarried mothers had much lower marriage rates than non-mothers, a differential that has largely vanished over time. Could this marriage-market penalty have been strong enough to explain why unmarried fertility rates were lower then? To explore this issue, we introduce a new model of fertility and marriage, based on directed search. Relative to the existing literature, the essential contributions of the model are to allow for accumulation of children over the lifecycle and for the marriage of single mothers. We use the model, in conjunction with US survey data, to explore the impact of marital prospects on the fertility decisions of unmarried women. We find that the decline, from the 1970s to 1995, in marriage rates of unmarried women with no children, can account for the dramatic rise in unmarried women’s share of births over that period

Competitive Auctions: Theory and Application

The theory of competitive auctions offers a coherent framework for modelling coordination frictions as a non-cooperative game. The theory represents an advancement over cooperative approaches that make exogenous assumptions about how output is divided between buyers and sellers and about the forces that bring buyers and sellers into local markets. Moreover, unlike price posting models, which fix the terms of trade prior to matching, competitive auction models have a bidding process that allocates the good (or service) to the highest valuation bidder at a price equal to the second highest valuation. Therefore, the competitive auction model is more robust to problems in which there are heterogenous valuations. This paper develops the theory of competitive auctions and applies it to a number of practical problems in microeconomics, labor economics, industrial organization, investment theory and monetary economics.

The interacting resonant level model in nonequilibrium: finite temperature effects

We study the steady-state properties as well as the relaxation dynamics of the nonequilibrium interacting resonant level model at finite temperatures. It constitutes the prototype model of a correlated charge fluctuating quantum dot. The two reservoirs are held at different chemical potentials---the difference being the bias voltage---and different temperatures; we discuss the transport through as well as the occupancy of the single level dot. First, we show analytically that in the steady state the reservoir temperatures in competition with the other energy scales act as infrared cutoffs. This is rather intuitive but, depending on the parameter regime under consideration, leads to a surprisingly rich variety of power laws in the current as a function of the temperatures and the bias voltage with different interaction dependent exponents. Next we clarify how finite reservoir temperatures affect the dynamics. They allow to tune the interplay of the two frequencies characterizing the oscillatory part of the time evolution of the model at zero temperature. For the exponentially decaying part we disentangle the contributions of the level-lead hybridization and the temperatures to the decay rates. We identify a coherent-to-incoherent transition in the long time dynamics as the temperature is raised. It occurs at an interaction dependent critical temperature. Finally, taking different temperatures in the reservoirs we discuss the relaxation dynamics of a temperature gradient driven current.Comment: 12 pages, 6 figures, 1 tabl

Entanglement scaling of excited states in large one-dimensional many-body localized systems

We study the properties of excited states in one-dimensional many-body localized (MBL) systems using a matrix product state algorithm. First, the method is tested for a large disordered non-interacting system, where for comparison we compute a quasi-exact reference solution via a Monte Carlo sampling of the single-particle levels. Thereafter, we present extensive data obtained for large interacting systems of L~100 sites and large bond dimensions chi~1700, which allows us to quantitatively analyze the scaling behavior of the entanglement S in the system. The MBL phase is characterized by a logarithmic growth (L)~log(L) over a large scale separating the regimes where volume and area laws hold. We check the validity of the eigenstate thermalization hypothesis. Our results are consistent with the existence of a mobility edge

Informational Intermediation and Competing Auctions

We examine the effects of provision of information about seller qualities by a third-party in a directed search model with heterogeneous sellers, asymmetric information, and where prices are determined ex post. The third party separates sellers into quality-differentiated groups and provides this information to some or all buyers. We show that this always raises total welfare, even if it causes the informed buyers not to trade with low quality sellers. However, buyers and some sellers may be made worse off in equilibrium. We also examine the provision of information by a profit maximizing monopoly, and show that it may have an incentive to overinvest in the creation of information relative to the social optimum.