First-price vs second-price auctions under risk aversion and private affiliated values

Under a specific informational framework, we compare the seller's expected revenue from a first-price auction and a second-price auction when bidders are risk averse and have private affiliated values.auctions, risk aversion, private affiliated values

Theoretical relation between water flow rate in a vertical fracture and rock temperature in the surrounding massif

A steady-state analytical solution is given describing the temperature distribution in a homogeneous massif perturbed by cold water flow through a discrete vertical fracture. A relation is derived to express the flow rate in the fracture as a function of the temperature measured in the surrounding rock. These mathematical results can be useful for tunnel drilling as it approaches a vertical cold water bearing structure that induces a thermal anomaly in the surrounding massif. During the tunnel drilling, by monitoring this anomaly along the tunnel axis one can quantify the flow rate in the discontinuity ahead before intersecting the fracture. The cases of the Simplon, Mont Blanc and Gotthard tunnels (Alps) are handled with this approach which shows very good agreement between observed temperatures and the theoretical trend. The flow rates before drilling of the tunnel predicted with the theoretical solution are similar in the Mont Blanc and Simplon cases, as well as the flow rates observed during the drilling. However, the absence of information on hydraulic gradients (before and during drilling) and on fracture specific storage prevents direct predictions of discharge rates in the tunnel

Lagrange duality for the Morozov principle

Considering a general linear ill-posed equation, we explore the duality arising from the requirement that the discrepancy should take a given value based on the estimation of the noise level, as is notably the case when using the Morozov principle. We show that, under reasonable assumptions, the dual function is smooth, and that its maximization points out the appropriate value of Tikhonov's regularization parameter.Comment: 7 pages, 1 figur

A proximal approach to the inversion of ill-conditioned matrices

We propose a general proximal algorithm for the inversion of ill-conditioned matrices. This algorithm is based on a variational characterization of pseudo-inverses. We show that a particular instance of it (with constant regularization parameter) belongs to the class of {\sl fixed point} methods. Convergence of the algorithm is also discussed

Overcoming inertia: insights from evolutionary economics into improved energy and climate policy

The mainstream view in economics has been a key factor in designing climate policies. Given that the controversy over the “efficiency paradox” has shown that mainstream economics is not neutral in the way it deals with climate change, the purpose of this paper is to investigate what insights could come out of analysing this crucial issue through an alternative economic framework. The choice of an evolutionary line of thought is then quite straightforward. It stems from both its departure from the perfect rationality hypothesis and its shift of focus towards a better understanding of innovation, system change and economic dynamics. All together this renders evolutionary economics a suitable complementary framework for designing climate policies and for managing the needed transition towards a low carbon economy. Most notably, the evolutionary framework allows us to depict the presence of two sources of inertia (i.e at the levels of individuals through “habits” and at the level of socio-technical systems) that mutually reinforce each other in a path-dependent manner. Accordingly, decision-makers should design measures (e.g. commitment strategies, niche management, etc.) that specifically target those change-resisting factors as they tend to reduce the efficiency of traditional instruments.Climate change ; energy consumption ; evolutionary economics ; habits; technological lock in ; transitions ;

What Allotment and Subcontracting in Procurement Bidding

Allotment and subcontracting are the two alternative mechanisms enabling the participation of SMEs in procurement. We compare these two alternatives in the context of a procurement contract awarded by a first-price sealed-bid auction. When the winning large firm is constrained with respect to the degree of subcontracting, we show that only a reduction of the chosen SME's profit can reduce the expected cost of the contract. However, when the large firm is allowed to choose the subcontracting level, subcontracting can be a Pareto dominating mechanism, i.e. simultaneously increasing both firms' profits and reducing the expected total cost of the contract.allotment; subcontracting; procurement; bidding

Do Managers Reciprocate? Field Experimental Evidence From a Competitive Market

A substantive amount of lab experimental evidence suggests that the norm of reciprocity has important economic consequences. However, it is unclear whether the norm of reciprocity survives in a natural and competitive environment with experienced agents. For this purpose we analyze data from a natural field experiment conducted with sales representatives who were instructed to randomly distribute product samples as gifts to their business partners. We find that distributing gifts to store managers boosts sales revenue substantially, which is consistent with the notion of reciprocity. However, the results underline that the nature of the relationship between market participants crucially affects the prevalence of reciprocal behavior.reciprocity, gift exchange, field experiment

Methodology for energy audits in the framework of the energy efficiency directive

The Energy Efficiency Directive 2012/27/EU (EED) was released in October 2012 and transposed in June 2014 by Member States. The Directive requires large companies to carry out an energy audit before December 2015, which has to be repeated every 4 years. A possibility for companies to be exempted from regular energy audits is to be or become certified by an approved energy management system (EnMS), most likely the international standard ISO 50001. In both cases it means that companies have to set plans and define actions to comply with European and national requirements that aim at improving their energy efficiency. Considering the differences across European countries regarding the awareness and involvement of the industrial sector in terms of energy management, a large number of companies still lack systematic and comprehensive systems to understand, monitor and improve their energy consumption in a cost-effective and sustainable way. This paper presents a methodology to carry out indicative energy audits in compliance with the European standard EN 16247-1 and including the ISO 50001 requirements of the energy planning phase (e.g. energy review, energy baseline and energy performance indicators). The proposed methodology follows a top down approach, starting from the energy bill and identifying major energy sources. It covers the evaluation of the actual system’s energy efficiency, identifies energy savings opportunities and presents an innovative approach for energy consumption monitoring via surrogate models of processes. It makes use of state-of-the-art techniques such as data reconciliation, heat integration via total site pinch analysis and statistical tools. Since natural gas and electricity usually take up the largest share of the total energy consumption in industry, the focus is put on these two energy carriers. One of the interesting aspects of the methodology concerns the data gathering and processing phases. Here the required data are targeted and classified in a systematic way in order to characterise the energy consumers and identify the areas of significant energy use presenting a potential for energy efficiency improvement. Once the energy review step is carried out, strategies for energy consumption monitoring should be developed. The methodology proposes an innovative approach to generate specific energy consumption models of industrial processes (surrogate models) that could be used to monitor units, online or offline, and detect deviations from expected behaviour

Optimizing condition numbers

In this paper we study the problem of minimizing condition numbers over a compact convex subset of the cone of symmetric positive semidefinite $n\times n$ matrices. We show that the condition number is a Clarke regular strongly pseudoconvex function. We prove that a global solution of the problem can be approximated by an exact or an inexact solution of a nonsmooth convex program. This asymptotic analysis provides a valuable tool for designing an implementable algorithm for solving the problem of minimizing condition numbers