Liquidity constraints and credit subsidies in auctions

I consider an auction with participants that differ in valuation and access to liquid assets. Assuming credit is costly (e.g. due to moral hazard considerations) different auction rules establish different ways of screening valuation-liquidity pairs. The paper shows that standard auction forms result in different allocation rules. When the seller can deny access to capital markets or offer credit subsidies, she gains an additional tool to screen agents. The paper derives conditions under which the seller increases profits by way of subsidizing loans. In particular, in a second price auction, the seller always benefits from offering small subsidies. The result extends to a non-auction setting to show that a monopolist may use credit subsidies as a price discrimination device

MORAL HAZARD IN TEAMS WITH LIMITED PUNISHMENTS AND MULTIPLE OUTPUTS

This paper studies incentive provision with limited punishments. It revisits the moral hazard problem with risk neutral parties and solves for optimal compensation schemes in situations where agents' participation is implied by a limited liability constraint. Providing minimum cost incentives to teams or individuals requires awarding high bonuses only when extreme performances are observed. Even when the first-best is attainable, the principal may prefer to induce more (or less) effort than it is sociably desirable because she only cares about the marginal cost of motivation. With positive production externalities joint bonuses are optimal. With limited liability on the principal's side, the optimal scheme becomes a tournament---even in the absence of externalities. The paper also looks at conditions that favor one incentive scheme over another when agents adapt their strategies as information becomes available.

LIQUIDITY CONSTRAINTS AND CREDIT SUBSIDIES IN AUCTIONS

I consider an auction with participants that differ in valuation and access to liquid assets. Assuming credit is costly (e.g. due to moral hazard considerations) different auction rules establish different ways of screening valuation-liquidity pairs. The paper shows that standard auction forms result in different allocation rules. When the seller can deny access to capital markets or offer credit subsidies, she gains an additional tool to screen agents. The paper derives conditions under which the seller increases profits by way of subsidizing loans. In particular, in a second price auction, the seller always benefits from offering small subsidies. The result extends to a non-auction setting to show that a monopolist may use credit subsidies as a price discrimination device.

A host of traveling waves in a model of three-dimensional water-wave dynamics

We describe traveling waves in a basic model for three-dimensional water-wave dynamics in the weakly nonlinear long-wave regime. Small solutions that are periodic in the direction of translation (or orthogonal to it) form an infinite-dimensional family. We characterize these solutions through spatial dynamics, by reducing a linearly ill-posed mixed-type initial-value problem to a center manifold of infinite dimension and codimension. A unique global solution exists for arbitrary small initial data for the two-component bottom velocity, specified along a single line in the direction of translation (or orthogonal to it). A dispersive, nonlocal, nonlinear wave equation governs the spatial evolution of bottom velocity.Comment: 22 pages with 1 figure, LaTeX2e with amsfonts, epsfig package

On the existence of positive solutions for a nonlinear elliptic class of equations in R2 and R3

We study the existence of positive solutions for an elliptic equation in RN for N = 2, 3 which is related with the existence of standing (localized) waves and the existence of the ground state solutions for some physical model or systems in fluid mechanics to describe the evolution of weakly nonlinear water waves. We use a variational approach and the well-known principle of concentration-compactness due to P. Lions to obtain the existence of this type of solutions, even in the case that the nonlinear term g is a non-homogeneous function or an operator defined in H1(RN) with values in R

Scale-setting, flavour dependence and chiral symmetry restoration

We determine the flavour dependence of the renormalisation-group-invariant running interaction through judicious use of both unquenched Dyson-Schwinger equation and lattice results for QCD's gauge-sector two-point functions. An important step is the introduction of a physical scale setting procedure that enables a realistic expression of the effect of different numbers of active quark flavours on the interaction. Using this running interaction in concert with a well constrained class of dressed--gluon-quark vertices, we estimate the critical number of active lighter-quarks above which dynamical chiral symmetry breaking becomes impossible: $n_f^{\rm cr}\approx 9$; and hence in whose neighbourhood QCD is plausibly a conformal theory.Comment: 8 pages, 4 figures, 2 table

Generating families of surface triangulations. The case of punctured surfaces with inner degree at least 4

We present two versions of a method for generating all triangulations of any punctured surface in each of these two families: (1) triangulations with inner vertices of degree at least 4 and boundary vertices of degree at least 3 and (2) triangulations with all vertices of degree at least 4. The method is based on a series of reversible operations, termed reductions, which lead to a minimal set of triangulations in each family. Throughout the process the triangulations remain within the corresponding family. Moreover, for the family (1) these operations reduce to the well-known edge contractions and removals of octahedra. The main results are proved by an exhaustive analysis of all possible local configurations which admit a reduction.Comment: This work has been partially supported by PAI FQM-164; PAI FQM-189; MTM 2010-2044

Moral hazard in teams with limited punishments and multiple outputs

This paper studies incentive provision with limited punishments. It revisits the moral hazard problem with risk neutral parties and solves for optimal compensation schemes in situations where agents' participation is implied by a limited liability constraint. Providing minimum cost incentives to teams or individuals requires awarding high bonuses only when extreme performances are observed. Even when the first-best is attainable, the principal may prefer to induce more (or less) effort than it is sociably desirable because she only cares about the marginal cost of motivation. With positive production externalities joint bonuses are optimal. With limited liability on the principal's side, the optimal scheme becomes a tournament-even in the absence of externalities. The paper also looks at conditions that favor one incentive scheme over another when agents adapt their strategies as information becomes available