Equilibrium in Scoring Auctions

This paper studies multi-attribute auctions in which a buyer seeks to procure a complex good and evaluate offers using a quasi-linear scoring rule. Suppliers have private information about their costs, which is summarized by a multi-dimensional type. The scoring rule reduces the multidimensional bids submitted by each supplier to a single dimension, the score, which is used for deciding on the allocation and the resulting contractual obligation. We exploit this idea and obtain two kinds of results. First, we characterize the set of equilibria in quasi-linear scoring auctions with multi-dimensional types. In particular, we show that there exists a mapping between the class of equilibria in these scoring auctions and those in standard single object IPV auctions. Second, we prove a new expected utility equivalence theorem for quasi-linear scoring auctions.Auctions, Procurement

How and when do markets tip? Lessons from the Battle of the Bund

In a famous episode of financial history which lasted over eight years, the market for the future on the Bund moved entirely from LIFFE, a London-based derivatives exchange, to DTB, a Frankfurt-based exchange. This paper studies the determinants of the observed dynamics, using a novel panel dataset that contains individual trading firms' membership status at each exchange together with other firms characteristics, and pricing, marketing and product portfolio strategies by each exchange. Our data allows us to distinguish between different explanations for the observed phenomenon. Our results indicate that the main driver was a "market coverage" effect: thanks to the combination its electronic market structure and EU-wide access deregulation, DTB increased the relevant size of the market for exchange members and disproportionately attracted those firms who originally did not exist or used to submit their orders through a broker. Differential liquidity and product portfolio strategies by the exchanges played a secondary role. JEL Classification: G21, G28, L13, L43adoption cost, Bund, electronic trading, Exchange competition, network effect, open outcry, tipping

Electoral Rules and the Emergence of New Issue Dimensions

Different electoral rules provide different incentives for parties competing for votes to adopt emerging issues. As a result, new societal issues will be integrated at different speeds into the political arena, and ultimately, into policy. In order to study this question formally, I propose an extension of the standard spatial model of political competition that allows for issue adoption and more generally, issue prioritizing at the platform level. The paper then compares the outcome of party competition under proportional and plurality rule. Entry is allowed and incumbent parties act as Stackelberg leaders vis-a-vis potential entrants. The analysis highlights the interaction between entry barriers and the type of emerging issue in determining when and how a new issue will be introduced. The theory explains both internal (that is, without entry by a new party) realignments of party systems along new dimensions and entry as part of the process of political realignment.Comparison of electoral rules, new issue, electoral competition, entry, realignment, party system change

A Graphical Analysis of Some Basic Results in Social Choice

We use a simple graphical approach to represent Social Welfare Functions that satisfy Independence of Irrelevant Alternatives and Anonymity. This approach allows us to provide simple and illustrative proofs of May's Theorem, of variants of classic impossibility results, and of a recent result on the robustness of Majority Rule due to Maskin (1995). In each case, geometry provides new insights on the working and interplay of the axioms, and suggests new results including a new characterization of the entire class of Majority Rule SWFs, a strengthening of May's Theorem, and a new version of Maskin's Theorem.

Procurement When Price and Quality Matter

A buyer seeks to procure a good characterized by its price and its quality from suppliers who have private information about their cost structure (fixed cost + marginal cost of providing quality). We solve for the optimal buying procedure, i.e. the procedure that maximizes the buyer’s expected utility. We then use the optimal procedure as a theoretical and numerical benchmark to study practical and simple buying procedures such as scoring auctions and negotiation. Specifically, we derive the restrictions that these simpler procedures place on allocations and compare them with the optimal allocations to generate insights about the properties of these simpler procedures and identify environments where they are likely to do well. We also use the optimal procedure benchmark to compare the performance of these procedures numerically. We find that scoring auctions are able to extract a good proportion of the surplus from being a strategic buyer, that is, the difference between the expected revenue from the optimal mechanism and the efficient auction. Sequential procedures (to which many negotiation processes belong) do less well, and, in fact, often do worse than simply holding an efficient auction. In each case, we identify the underlying reason for these results

Properties of Scoring Auctions

This paper studies scoring auctions, a procedure commonly used to buy differentiated products: suppliers submit offers on all dimensions of the good (price, level of non monetary attributes), and these are evaluated using a scoring rule. We provide a systematic analysis of equilibrium behavior in scoring auctions when suppliers private information is multidimensional (characterization of equilibrium behavior and expected utility equivalence). In addition, we show that scoring auctions dominate several other commonly used procedures for buying differentiated products, including menu auctions, beauty contests and price-only auctions with minimum quality thresholds

Investment Incentives in Procurement Auctions

We investigate firms’ incentives for cost reduction in the first price sealed bid auction, a format largely used for procurement. A central feature of the model is that we allow firms to be heterogeneous. Though private value first price auctions are not games with monotonic best responses, we find that for comparative statics purposes they behave like these games. In particular, firms will tend to underinvest in cost reduction because they anticipate fiercer head-on competition. Using the second price auction as a benchmark, we also find that the first price auction will elicit less investment from market participants. Moreover, both auction formats tend to favor investment by the current market leader and are therefore likely to reinforce asymmetries among market participants

Electoral Rules and the Emergence of New Issue Dimensions

Different electoral rules provide different incentives for parties competing for votes to adopt emerging issues. As a result, new societal issues will be integrated at different speeds into the political arena, and ultimately, into policy. In order to study this question formally, I propose an extension of the standard spatial model of political competition that allows for issue adoption and more generally, issue prioritizing at the platform level. The paper then compares the outcome of party competition under proportional and plurality rule. Entry is allowed and incumbent parties act as Stackelberg leaders vis-à-vis potential entrants. The analysis highlights the interaction between entry barriers and the type of emerging issue in determining when and how a new issue will be introduced. The theory explains both internal (that is, without entry by a new party) realignments of party systems along new dimensions and entry as part of the process of political realignment

De schoolinschrijvingen in Brussel regelen

Met dit artikel wil de auteur een bijdrage leveren tot de reflectie over het schoolinschrijvingsbeleid dat het best aangepast is aan de behoeften van het Brussels Hoofdstedelijk Gewest. Daartoe wordt in eerste instantie het huidige debat over de schoolinschrijvingen in zijn juiste context geplaatst door een onderscheid te maken tussen, enerzijds, de beleidsdoelstellingen die nagestreefd worden en, anderzijds, de procedure die gevolgd wordt om die doelstellingen te verwezenlijken. Die twee aspecten kunnen immers los van elkaar geanalyseerd worden. In tweede instantie beschrijft de auteur de specifieke uitdagingen voor Brussel op het vlak van het inschrijvingsbeleid. Daarna worden twee scenario’s met mogelijke doelstellingen en een mogelijke hiërarchisering ervan voorgesteld. Vervolgens stelt de auteur een procedure voor om die doelstellingen zo goed mogelijk te verwezenlijken. Het is de bedoeling om voort te bouwen op het huidige debat en rekening te houden met de specifieke uitdagingen voor Brussel om de noodzakelijke beleidskeuzes en de praktische aspecten van de tenuitvoerlegging te verduidelijken.Cet article se veut une contribution aux réflexions concernant la politique d’inscriptions scolaires la mieux adaptée aux besoins de la Région de Bruxelles-Capitale. A cette fin, nous recadrons dans un premier temps le débat actuel sur les inscriptions scolaires en distinguant les objectifs politiques poursuivis, de la procédure qui met en œuvre ces objectifs et en argumentant que l’analyse de ces deux aspects peut être entreprise de façon indépendante. Dans un deuxième temps, nous décrivons les enjeux spécifiques auxquels fait face la Région en ce qui concerne les inscriptions scolaires. Enfin, nous nous décrivons deux scénarios d’objectifs possibles et de hiérarchisation possible de ceux-ci. Nous proposons ensuite une procédure qui permette d’atteindre aux mieux ces objectifs. L’idée ici est de bâtir sur le débat actuel et les enjeux spécifiques de Bruxelles afin d’illustrer les arbitrages politiques nécessaires et les aspects pratiques de leur mise en œuvre.This article aims to contribute to the current debate on the optimal regulation of school choice in the Brussels Capital Region. We first summarize the current regulatory framework and make the distinction between the political objectives pursued by the regulation of school choice, and the procedure that implements these objectives. We argue that these two aspects can be analyzed separately. We then describe the specific challenges that the Region faces as far as school choice is concerned. Next, we analyze two scenarios consisting of a set of political objectives for school choice regulation in Brussels and a possible ranking among those. These political objectives echo some of the objectives for school choice regulation mentioned in the public debate but are tailored to the specific needs of the Region. Finally, we describe a procedure that implements these objectives. The exercise illustrates the type of arbitrage public decision makers need to make and several key practical aspects of the implementation