renegotiation on incomplete procurement contracts abstractthis article examines the impact of incomplete contracts on procurement costs in road construction auctions ex ante contracts in these auctions often fail to specify all of the potential construction contingencies and consequently changes in scope are necessary after construction begins using vermont road construction contract data this study finds evidence that there is a statistically significant difference in costs of firms between auctions with and without extra work adjustments substantial adaptation costs are responsible for the higher procurement outlays in incomplete contract i also find that bidders inflate their bids to incorporate risk premiums in incomplete contracts however my estimates suggest that this bidding behaviour does not affect their profit margins

deciding between competition and collusion we develop an approach to identify and test for bid rigging in procurement auctions first we introduce a general auction model with asymmetric bidders second we study the problem of identie cation in our model we state a set of conditions that are both necessary and sufe cient for a distribution of bids to be generated by a model with competitive bidding third we discuss how to elicit a prior distribution over a e rm s structural cost parameters from industry experts given this prior distri bution we use bayes s theorem to compare competitive and collusive models of industry equilibrium finally we apply our methodology to a data set of bidding by construction e rms in the midwest the techniques we propose are not computationally demanding use e exible functional forms and can be programmed using most standard statistical packages

prices and the winner s curse we usually assume that increases in supply allocation by rationing and exclusion of potential buyers reduce prices but all these activities raise the expected price in an important set of cases when common value assets are sold furthermore when we make the assumptions needed to rule out these anomalies for symmetric buyers small asymmetries among the buyers necessarily cause the anomalies to reappear our results help explain rationing in initial public offerings and outcomes of spectrum auctions we illustrate our results in the wallet game and in another new game we introduce the maximum game

empirical implications of equilibrium bidding in first price symmetric common value auctions this paper studies federal auctions for wildcat leases on the outer continental shelf from 1954 to 1970 these are leases where bidders privately acquire at some cost noisy but equally informative signals about the amount of oil and gas that may be present we develop tests of rational and equilibrium bidding in a common values model that are implemented using data on bids and ex post values we also use data on tract location and exposr values to test the comparative static prediction that bidders may bid less aggressively in common value auctions when they expect more competition we find that bidders are aware of the winner s curse and their bidding is largely consistent with equilibrium

the internationalisation of stock markets and the abolition of u k exchange control this paper aims to assess the impact of the abolition of u k exchange control on the degre of integration of u k and overseas stock markets using cointegration techniques we find that although there is no significant increase in the correlation of short run stock market returns for the united kingdom and certain overseas markets post 1979 there does appear to be a marked increase in the degree to which these markets move together in the long run after this date there appears to be no long run gain from diversification since cointegration of two variables implies that at least one of them can be used to help forecast the other our findings also imply the inefficiency of a number of stock markets

a political economy model of congressional careers our main goal is to quantify the returns to a career in the united states congress we specify a dynamic model of career decisions of a member of congress and estimate this model using a newly collected dataset given estimates of the structural model we assess reelection probabilities estimate the effect of congressional experience on private and public sector wages and quantify the value of congressional seat moreover we assess how an increase in the congressional wage or the imposition of term limits would affect the career decisions of politicians and the returns from a career in congress

subcontracting and the survival of plants in the road construction industry a panel quantile regression analysis this paper investigates how subcontracting parts of contracted work shapes entrants success and survival we find that newly developed quantile regression approaches can be adapted to study survival of firms competing for government contracts in road construction the method is applied on a data set that includes patterns of firm entry exit and auction related information we find an apparent increase in the business life of firms who subcontract out part of their projects in texas these subcontracting effects appear to be more pronounced for firms with few or no options outside the industry and among firms who contract out part of their work to disadvantaged business enterprises

equilibrium in auctions with entry the authors model entry incentives in auctions with risk neutral bidders and characterize a symmetric equilibrium in which the number of entrants is stochastic the presence of too many potential bidders raises coordination costs that detract from welfare the authors show that the seller and society can benefit from policies that reduce market thickness i e the relative abundance of buyers their analysis extends well known revenue equivalence and ranking theorems but also demonstrates that variations in the auction environment affect optimal policies e g reservation prices in ways not anticipated by models that ignore entry copyright 1994 by american economic association

an empirical analysis of entrant and incumbent bidding in road construction auctions this paper explores differences in the bidding patterns of entrants and incumbents in road construction auctions we find that entrants bid more aggressively and win auctions with significantly lower bids than incumbents the differences in their bidding patterns are consistent with a model of auctions in which the distribution of an entrant s costs exhibits greater dispersion than that of an incumbent s and relations of stochastic dominance in the distributions do not persist for the entire range of estimated costs we also find that more efficient firms bid on average more aggressively and firms with greater backlogs bid less aggressively

legislative professionalism and incumbent reelection the development of institutional boundaries it is well established that legislators from highly professionalized bodies are more likely to win reelection than members of less professionalized legislatures we find that the effect of professionalization on incumbent electoral success is far more pervasive as the level of professionalism of a legislature increases the effects of external political and economic forces such as coattails from higher level elections and national economic conditions on a legislator s chances for reelection diminish in strength this implies that legislative professionalization promotes institutionalization by establishing boundaries that insulate members from external shocks we reach these conclusions by specifying and testing a district level model of state legislative election outcomes using as dependent variable the probability that an incumbent will win reelection the model is estimated with probit using data for more than 42 000 state legislators from 1970 to 1989 w hat determines whether a legislator seeking reelection will win we address this question by paying particular attention to the role of professionalization of legislatures in influencing the electoral success of members we know that american legislators are highly likely to win reelection garand 1991 jacobson 1987 king 1991 we also know that those from highly professionalized institutions have even better odds than those from less professionalized bodies as the former have greater resources for travel to their districts holbrook and tidmarch 1991 for casework cox and morgenstern 1993 1995 king 1991 and for devoting time and energy to campaign activities carey niemi and powell 2000 we maintain however that professionalism does more than boost the electoral prospects of incumbents it changes members relationships with the legislature s political and economic environment in particular professionalization promotes legislative institutionalization by

bidding off the wall why reserve prices may be kept secret abstract this note shows by means of an example that in a common value auction a seller with a random reservation value can increase her ex ante expected profits by following a policy of conducting an auction in which her reserve price is kept secret compared to an auction in which the reserve price is announced by keeping the reserve price secret the seller is able to encourage greater participation from the bidders and can therefore increase the linkage of the price paid to the value of the purchased object journal of economic literature classification numbers d82 d44

procurement contracting with time incentives theory and evidence in public procurement social welfare often depends on how quickly the good is delivered a leading example is highway construction where slow completion inflicts a negative externality on commuters in response highway departments award some contracts using scoring auctions which give contractors explicit incentives for accelerated delivery we characterize efficient design of these mechanisms we then gather an extensive data set of highway projects awarded by the california department of transportation between 2003 and 2008 by comparing otherwise similar contracts we show that where the scoring design was used contracts were completed 30 40 faster and the welfare gains to commuters exceeded the increase in procurement costs using a structural model that endogenizes participation and bidding we estimate that the counterfactual welfare gain from switching all contracts from the standard design to the efficient apb design is nearly 22 of the total contract value 1 14 billion copyright 2011 oxford university press

threshold cointegration between inflation and us capacity utilization abstractan analogue to the phillips curve shows a positive relationship between inflation and capacity utilization some recent empirical work has shown that this relationship has broken down when using data after the mid 1980s we empirically investigate this issue using several threshold error correction models we find in the long run a 1 increase in the rate of inflation leads to approximately a 0 0046 increase in capacity utilization the asymmetric error correction structure shows that changes in capacity utilization show significant corrective measures only during booms while changes in inflation correct during both phases of the business cycle with the corrections being stronger during recessions we also find that in the short run changes in the inflation rate do granger cause capacity utilization while changes in capacity utilization do not granger cause inflation the granger causality from inflation to capacity utilization can be interpreted as supporting recent calls made in the popular

the effect of information on the bidding and survival of entrants in procurement auctions in government procurement auctions of construction contracts entrants are typically less informed and bid more aggressively than incumbent rms this bidding behavior makes them more sus ceptible to losses aecting their prospect of survival in april of 2000 the oklahoma department of transportation started releasing the internal cost estimates to complete highway construction projects using newly developed quantile regression approaches this paper examines the impact of the policy change on aggressive entrants first we nd that the information release eliminates the bidding dierential between entrants and incumbents attributed to informational asymmetries second we argue that the policy change aects the prospects of survival of entrants in the market we nd that those who used to exit the market relatively soon are now staying 37 percent longer while at the median level bidding duration increased by roughly 68 percent the policy has the potential to encourage entry in government procurement auctions and thus increase competition

spatial structure of agricultural production in china the spatial structure of county level agricultural production in china in 1999 is analysed a convenient simple method that corrects for both spatial autocorrelation and spatial heterogeneity in the input output relationships using spatial lag models and an allowance for the response coefficients to vary across relatively homogeneous regions are described empirical results suggest an abundant labour supply and extensive use of agricultural machinery reflected in its declining price although mechanization is relatively new machines have replaced fertilizer in agricultural production in the north northeast northwest and east regions while irrigation and fertilizer are the significantly important inputs in the central and southwest regions

efficiency in auctions with private and common values an experimental study this discussion has resulted in a publication in the american economic review 2002 92 3 625 43 auctions are generally not efficient when the object s expected value depends on private and common value information we report a series of first price auction experiments to measure the degree of inefficiency that occurs with financially motivated bidders while some subjects fall prey to the winner s curse they weigh their private and common value information in roughly the same manner as rational bidders with observed efficiencies close to predicted levels increased competition and reduced uncertainty about the common value positively affect revenues and efficiency the public release of information about the common value also raises efficiency although less than predicted

moral hazard incentive contracts and risk evidence from procurement deadlines and late penalties are widely used to incentivize effort tighter deadlines and higher penalties induce higher effort but increase the agent s risk we model how these contract terms affect the work rate and time to completion in a procurement setting characterizing the efficient contract design using new micro level data on minnesota highway construction contracts that includes day by day information on work plans hours worked and delays we find evidence of ex post moral hazard contractors adjust their effort level during the course of the contract in response to unanticipated productivity shocks in a way that is consistent with our theoretical predictions we next build an econometric model that endogenizes the completion time as a function of the contract terms and the productivity shocks and simulate how commuter welfare and contractor costs vary across different terms and shocks accounting for the traffic delays caused by construction switching to a more efficient contract design would increase welfare by 22 5 of the contract value while increasing the standard deviation of contractor costs a measure of risk by less than 1 of the contract value

can the seller benefit from an insider in common value auctions abstract in existing models of first price common value auctions heterogeneous bidder information characterized by a well informed insider is detrimental to the seller s revenue we show that this is not a general principle the linkage effect of increased information identified by milgrom and weber has force in our model of heterogeneous bidders and dominates any adverse effects of an insider on revenues in addition a bidder with garbled information can profit in a first price auction if his information is private and an inside bidder may prefer to have less information about the outside bidder s signal journal of economic literature classification numbers d44 d82

cointegration and threshold adjustment this article proposes an extension to the engle granger testing strategy by permitting asymmetry in the adjustment toward equilibrium in two different ways we demonstrate that our test has good power and size properties over the engle granger test when there are asymmetric departures from equilibrium we consider an application namely whether there exists cointegration among interest rates for instruments with different maturities this issue has been widely tested with mixed results we argue that either cautious policy or possibly opportunistic behavior on the part of the federal reserve implies that an equilibrium relationship between short and long term interest rates exists but that adjustments from disequilibrium are asymmetric in nature empirical tests using u s yields confirm the asymmetric nature of error correction among interest rates of different maturities

candidate quality in a downsian model with a continuous policy space abstract this paper characterizes a unique mixed strategy nash equilibrium in a one dimensional downsian model of two candidate elections with a continuous policy space where candidates are office motivated and one candidate enjoys a non policy advantage over the other candidate we show that if voters utility functions are concave and the median voter ideal point is drawn from a unimodal distribution there is a mixed strategy nash equilibrium where the advantaged candidate chooses the ideal point of the expected median voter with probability one and the disadvantaged candidate uses a mixed strategy that is symmetric around it existence conditions require the variance of the distribution to be small enough relative to the size of the advantage

the marginals never vanished incumbency and competition in elections to the u s house of representatives 1952 82 the average vote margin enjoyed by incumbent candidates for the u s house of representatives increased sharply during the 1 960s despite this and contrary to assumptions common in the literature on recent congressional elections electoral data show that house incumbents are no safer now than they were in the 1950s the marginals properly defined have not vanished the swing ratio has diminished little if at all and competition for house seats held by incumbents has not declined vote margins increased without adding to incumbent security diminishing competition or dampening swings because the heterogeneity of interelection vote swings increased at the same time

an empirical study of an auction with asymmetric information this paper examines federal auctions for drain age leases on the outer continental shelf from 1959 to 1969 these are leases that are adjacent to tracts on which a deposit has been discovered the authors find that the data strongly support the hypotheses that neighbor firms are better informed about the value of a lease than nonneighbor firms that neighbor firms coordinate their bidding decisions and that both types of firms bid strategically in accordance with the bayesian nash equilibrium model for first price sealed bid auctions with asymmetric information

regulating bidder participation in auctions regulating bidder participation in auctions can potentially increase efficiency compared to standard auction formats with free entry we show that the relative performance of two such mechanisms a standard first price auction with free entry and an entry rights auction depends nonmonotonically on the precision of information that bidders have about their costs prior to deciding whether to participate in a mechanism as an empirical application we estimate parameters from first price auctions with free entry for bridge building contracts in oklahoma and texas and predict that an entry rights auction increases efficiency and reduces procurement costs significantly

subcontracting and competitive bidding on incomplete procurement contracts this article examines the impact of incomplete contracts on subcontracting and the design of procurement auctions i estimate the effect of ex post contract revisions on unit costs for both subcontracted and in house performed work items on bridge projects procured by the california department of transportation i model a scoring auction showing how ex post revisions skew bidding decisions and estimate unit costs from bid data using the method of sieve estimation the results highlight the cost implications of incomplete contracting frictions subcontracting decisions and bidding distortions in conclusion i propose alternative auction mechanisms that could improve outcomes

predicting bid prices by using machine learning methods abstractit is well known that empirical analysis suffers from multicollinearity and high dimensionality in particular this is much more severe in an empirical study of itemized bids in highway pr

party government and the cohesive power of public plunder we argue that party government in the u s house of representatives rests on two pillars the pursuit of policy goals and the disbursement of particularistic benefits existing theories of party government argue that the majority party in the house is often successful in biasing policy outcomes in its favor in the process it creates policy losers among its own members who nevertheless support their party on procedural votes we posit that the majority party creates an incentive for even the policy losers to support a procedural coalition through judicious distribution of particularistic benefits that compensates policy losers at a rate commensurate with the policy losses that they suffer we evaluate our theory empirically using the concept of roll rates in conjunction with federal domestic outlays data for the period 1983 96 we find that within the majority party policy losers are favored in the distribution of pork barrel spending throughout this period

alternative common value auction procedures revenue comparisons with free entry the logic of revenue comparisons for different types of common value auctions is substantially altered if the number of participants rather than being fixed responds endogenously to the expected profitability from participating in a thoroughly symmetric model a seller may prefer that competition be indirect an auction procedure in which fewer participants are needed to drive the expected profitability from participating down to the level obtainable in other auctions in the economy can attain higher expected revenue if a sale is sufficiently likely this insight allows a complete revenue ranking of standard auction procedures with endogenous entry

5 information impact and allocation rules in auctions with affiliated private values a laboratory study in affiliated private value auctions each bidder has perfect information regarding his her own value for the object at auction but higher values of the item for one bidder make higher values for other bidders more likely we report on a series of experiments examining three key implications of these auctions i in a first price auction public information about rivals values increases expected revenue ii an english auction increases expected revenue compared to a first price auction and iii a second price auction is isomorphic to an english auction in examining these issues we compare predictions of some ad hoc bidding models with nash equilibrium predictions in the first price auction experiments nash equilibrium bidding theory organizes the data better than either of two ad hoc bidding models public information about others valuations does increase average revenue but the increase in revenue is smaller and less reliable than predicted under risk neutral nash equilibrium bidding lower average revenue might be attributed to risk aversion while the high variability is attributed to a sizable frequency of individual bidding errors relative to the theory bidding theory precisely organizes english auction outcomes after a brief initial learning period the dominant strategy equilibrium does not organize second price auctions nearly as well as market prices persistently exceed predicted prices the difference between english and second price outcomes is attributed to effects of different information flows inherent in the structure of the two institutions on eliminating bidding errors revenue impacts of these two institutions relative to a first price auction are examined in light of observed bidding patterns

changes in the vote margins for congressional candidates a specification of historical trends recent research on house elections has focused on the decline in congressional competition since the mid 1960s however this body of research suffers from three major problems 1 an imprecise specification of the nature of change in the degree of congressional competition 2 its exclusive reliance on a limited time frame which calls into question the generalizability and adequacy of its explanations and 3 its overemphasis on incumbency oriented explanations using a multiple interrupted time series mits analysis of trends in aggregate electoral data from 1824 to 1980 we find that current low levels of congressional competition are not historically unique but instead constitute a continuation of a long term trend established in the mid 1890s in addition and in contrast to the general thrust described in the literature there appears to be a post 1965 trend toward greater competition although the absolute level of competition is lower after the mid 1960s finally a disaggregation of electoral results by incumbency status suggests a growth in the incumbency advantage since the mid 1890s but that lower post 1965 levels of congressional competition are the result of a winners and not an incumbency advantage such findings cast doubt on the adequacy of explanations that focus on post 1965 incumbency oriented factors

looking beyond reelection revising assumptions about the factors motivating congressional behavior this paper challenges the assumption inherent in most models of legislative behavior namely that congressmen are driven by the desire for reelection i offer an alternative perspective incumbents seek to maximize their discretionary investments and the income generated by the job the only constraint on this behavior is that legislators provide a satisfactory level of constituency service a product that i suggest entails slight opportunity and few manufacturing costs for congressmen and one that is unlikely to lose its value with increased production i also demonstrate that increases in salary and discretionary investments have lengthened congressional careers

win lose or withdraw a categorical analysis of career patterns in the house of representatives 1948 1978 the literature on incumbency advantage has focused on margin as an indicator for electoral security but while electoral margin is a goodex ante measure it is a poorex post measure of security further existing work has not integrated the choice of retirement with changes in the level of security to improve the specification and definition of marginality a multinomial logit model is proposed where the dependent variable is categorical account is therefore taken of all the ways a representative s term in office can end including reelection defeat retirement or pursuit of other office the sample includes all u s representatives elected for the first time between 1948 and 1978 the results indicate that 1 margin in the previous election is a significantex ante proxy for the probability of electoral defeat and 2 while the electoral safety of all incumbents in the house has been increased the increases are greater for members elected for the first time in the period since 1965

information disclosure as a matching mechanism theory and evidence from a field experiment market outcomes depend on the quality of information available to its participants we measure the effect of information disclosure on market outcomes using a large scale field experiment that randomly discloses quality information in wholesale automobile auctions we argue that buyers in this market are horizontally differentiated across cars that are vertically ranked by quality this implies that information disclosure helps match heterogeneous buyers to cars of varying quality causing both good and bad news to increase competition and revenues the data confirm these hypotheses these findings have implications for the design of other markets including e commerce procurement auctions and labor markets jel c93 d44 d82 l15

investigation of production sales and inventory relationships using multicointegration and non symmetric error correction models the accumulated sum of a stationary series is called integrated if a linear combination of some of the integrated series is stationary it is said to be cointegrated this paper presents empirical results on inventories to consider the possibility of a deeper form of cointegration called multicointegration which is introduced in granger and lee 1989 a vector integrated series is multicointegrated if the accumulated sum of its stationary cointegrated linear combination is again cointegrated with itself inventory which is the accumulated sum of production minus sales is probably cointegrated with production and sales the empirical results generally support the presence of multicointegration of production and sales in many u s industries and industrial aggregates the results also favour the non symmetric error correction model providing evidence that the strength of attraction is different on both sides of the attractor a modified s s rule for inventory control is investigated in the context of a non symmetric error correction model and the results generally do not support the s s rule sufficient evidence is found to conclude that multicointegration is a useful concept in the area of inventory determination

an empirical study of the asymmetric cointegration relationships among the chinese stock markets the enders and siklos asymmetric cointegration test is employed to examine the long run asymmetric equilibrium relationships between the chinese shanghai and shenzhen stock markets three samples are adopted which are the whole sample october 1992 to september 2002 the first subsample before b shares were opened up to the chinese public october 1992 to february 2001 and the second subsample after b shares were opened up february 2001 to september 2002 the estimated results are as follows first when the conventional engle granger symmetric cointegration test is used only the a shares in shanghai and shenghen stock exchange market are cointegrated when using the whole sample and the first subsample however with the enders siklos m tar asymmetric cointegration test shenzhen a and b shares stock prices have an asymmetric cointegration relationship after b shares were open suggesting that openness increases the market efficiency furthermore the two a shares in shanghai and shenzhen stock exc

price adjustment policies in procurement contracting an analysis of bidding behavior the fluctuations in fuel prices over the past decade led a number of government agencies to introduce price adjustment clauses in procurement contracting those clauses were primarily designed to reduce contractors uncertainty without considering the impact of such initiatives on bidding and the budget we analyze a newly constructed detailed panel of observations on bids for construction contracts and compare bidding behavior across periods and projects and across items within projects estimates from a difference in differences approach indicate that bidding becomes more aggressive and less dispersed after the implementation of this policy the difference is more pronounced when we consider itemized bids than overall project bids alternative techniques of regression discontinuity and nonparametric estimation are applied and yield consistent results

incumbency effects in political campaigns in this paper we examine two effects of incumbency first an incumbent may have an advantage in creating a favorable image in the eyes of the voters second the incumbent may have to chose a position before the challenger this second aspect of incumbency is modelled as stackelberg leadership in the model two candidates run for election by choosing a position in an ideological spectrum voters care about candidates chosen positions as well as non policy attributes of candidates which we call charisma charismata are not known when candidates choose policy positions they are only revealed on election day so that winning is not usually a certain prospect candidates care about the probability of winning but they also dislike compromising their own ideals

modelling the linkages between us and latin american stock markets this paper examines the linkages between us and latin american stock markets during the 1995 2002 period using recently developed cointegration techniques that allow for structural shifts in the long run relationship results suggest that when conventional cointegration tests are applied a long run relationship is found only in the cases of brazil and mexico for the dow jones dj index and in the case of brazil for the standard and poor s 500 sp500 index in contrast if the possibility of structural breaks is introduced strong evidence is found in favour of such a relationship between the argentine chilean and venezuelan indices and the dj index after the 1998 financial turmoil and between the brazilian and mexican indices and the dj index before such turbulence while some marginal cointegration is detected between the mexican and dj indices from february 1998 additionally evidence is found of a cointegrating relationship between the argentine chilean and mexican indices and the sp500 index f

declining electoral competitiveness in the house of representatives the differential impact of improved transportation technology this paper advances the hypothesis that improvements in the national transportation and communication infrastructure are responsible for the vanishing marginals or the increased electoral security of u s representatives we assume that margin and security are directly affected by the amount of time a legislator or a member of her staff devotes to direct contact with constituents in the home district formally we demonstrate that a decline in the time opportunity cost associated with travel to the district improves victory margins where we proxy improvement in transportation technology by using a distance variable across three different historical samples 1890 1928 and 1970 this proposition offers a potentially more fundamental explanation of declining electoral competition than existing explanations focusing on professionalism careerism redistricting and bureaucratic casework in fact the technology communication hypothesis may well encompass such explanations the model specified here offers at best a crude test of the hypothesis that technology and communication are the cause of the vanishing marginals a superior test would include the actual time required to travel to each district in each sample year because a closer but more inaccessible location would be less electorally favorable according to the logic underlying our model while distance is therefore an imperfect proxy we are encouraged by the results of the preliminary test the next step for future research is to identify which technological innovations have had the greatest impact in order to accomplish this a more complete model of the link between legislators and constituents must be established

challenger entry and voter learning we develop a model of strategic interaction between voters and potential electoral challengers to sitting incumbents in which the very fact of a costly challenge conveys relevant information to voters given incumbent failure in office challenger entry is more likely but the threat of entry by inferior challengers creates an incentive for citizens to become more politically informed at the same time challenges to incumbents who perform well can neutralize a voter s positive assessment of incumbent qualifications how a voter becomes politically informed can in turn deter challengers of different levels of competence from running depending on the electoral environment the model permits us to sharpen our understanding of retrospective voting the incumbency advantage and the relationship between electoral competition and voter welfare while pointing to new interpretations of and future avenues for empirical research on elections

disadvantaged business enterprise goals in government procurement contracting an analysis of bidding behavior and costs programs that encourage the participation of disadvantaged business enterprises dbe as subcontractors have been a part of government procurement auctions for over three decades in this paper we examine the impact of a program that requires prime contractors to subcontract out a portion of a highway procurement project to dbe firms we study how dbe subcontracting requirements affect bidding behavior in federally funded projects within a symmetric independent private value framework we use the equilibrium bidding function to obtain the cost distribution of firms undertaking projects either with or without subcontracting goals we then use nonparametric estimation methods to uncover and compare the cost of firm bidding on a class of asphalt projects related to surface treatment in texas the analysis shows little differences in the cost structure between projects that have subcontracting goals and those that do not

electoral equilibria with restricted strategies we construct a spatial election model in which candidates inherit initial positions in the strategy space presumably from previous political activity and they are restricted to strategies close to their initial positions we establish sufficient conditions for the existence of an equilibrium the equilibrium need not entail an expectation of a zero plurality for each candidate we then apply this model to a sequence of elections in which a series of opposition candidates challenge incumbents given certain regularity conditions the result will be an apparent incumbency advantage corresponding to that observed in recent congressional elections

equilibria in open common value auctions abstract a sufficient condition for uniqueness of nash equilibrium in second price common value auctions is identified we establish that there exists a continuum of equilibria in irrevocable exit common value auctions for the case of two bidders we provide plausible sufficient conditions under which the expected seller revenue is maximized at the symmetric equilibrium an example in which the auctioneer s revenue at the symmetric equilibrium in a second price auction is strictly greater than the revenue at many asymmetric equilibria in the corresponding irrevocable exit auction is provided

divided government versus incumbency externality effect quasi experimental evidence on multiple voting decisions abstract this paper explores the causal relationship between vote outcomes in different elections we ask 1 does the partisan identity of the mayor influence the voter s decision in subsequent town council elections 2 do voters condition their vote for the mayor on the result of the last council election the analysis mainprod type flply relies on a regression discontinuity design focusing on close election outcomes based on municipal level data for germany we find that the party of the mayor can receive a significant bonus in the next town council election moreover voters punish mayor candidates of parties that performed strongly in earlier council elections throughout the paper we highlight how these findings can be related to an incumbency externality effect and to the theory of divided government

a model of candidate location when one candidate has a valence advantage that under some fairly weak assumptions for all levels of the valence advantage the advantaged candidate chooses a more moderate position than the disadvantaged candidate empirical studies of congressional elections by fiorina 1973 and ansolabehere snyder and stewart 2001 support this result d owns 1957 seminal work presents a puzzle for scholars of u s elections why do candidates not converge to the median voter one of the best explanations is that the candidates themselves have ideological preferences as calvert 1985 and wittman 1977 1983 have shown when candidates have such preferences and they are sufficiently uncertain about the preferences of the median voter then they do not converge although they may moderate their positions from their ideal point the basic version of the calvert wittman model however does not account for another basic fact of u s elections often one of the candidates has an advantage due to a nonpolicy factor such as incumbency greater campaign funds better name recognition superior charisma superior intelligence and so on stokes has dubbed such factors valence factors and he has noted their importance in u s elections stokes 1963 1992 1 in this article i extend the basic calvert wittman model by giving one candidate a valence advantage over the other i show that if the valence characteristics of the candidates are approximately equal then when a candidate s valence advantage increases this causes her to move toward the

electricity consumption and economic growth in nigeria a revisit of the energy growth debate abstract this paper examines the dynamic causal linkages between electricity consumption and economic growth in nigeria within a trivariate vecm for the period 1971 2011 the paper obviates the variable omission bias and the use of cross sectional techniques that characterise most existing studies the results show that there is a distinct causal flow from electricity consumption to economic growth both in the short run and in the long run this finding supports the electricity led growth hypothesis that has been conjectured in the literature the paper urges policy makers in nigeria to implement policies which enhance the generation and consumption of electricity in order to engineer economic growth appropriate monetary policies must also be put in place in order to moderate inflation thus enhancing growth

bidder behavior in multiunit auctions evidence from swedish treasury auctions we analyze a unique data set on multiunit auctions which contains the actual demand schedules of the bidders as well as the auction awards in over 400 swedish treasury auctions first we document that bidders vary their prices bid dispersion and the quantity demanded in response to increased uncertainty at the time of bidding second we find that bid shading can be explained by a winner s curse driven model in which each bidder submits only one bid despite the fact that the bidders in our data set use much richer bidding strategies third we explore the extent to which the received theories of multiunit auctions are able to offer insights into the bidder behavior we observe our empirical evidence is consistent with some of the predictions of the models of auctions that emphasize private information the winner s curse and the champion s plague while the models of multiunit auctions serve as useful guideposts our empirical findings also point to several new areas of research in multiunit auctions

what s a losing party to do the calculus of contesting state legislative elections existing theories of contesting elections typically treat all potential challengers as identical while under playing the importance of political parties and primary contests we offer a theory addressing these issues based on how the various actors in the process define and evaluate the probability of winning an election and the value of the office being contested we test our theory by estimating a model predicting which of three responses a party that loses a legislative race makes in the next cycle nominating the same candidate nominating a new candidate or nominating no one we find substantial empirical support for our theory

threshold cointegration and purchasing power parity in the pacific nations the paper uses a threshold cointegration methodology to explore the properties of long run purchasing power parity ppp in the pacific nations using japan and the usa as base countries it is shown that long run ppp holds for most asian countries but that the adjustment mechanism is asymmetric in contrast to symmetric error correction models it is found that asymmetric adjustments of nominal exchange rates play an important role in eliminating deviations from long run ppp

the effect of candidate quality on electoral equilibrium an experimental study when two candidates of different quality compete in a one dimensional policy space the equilibrium outcomes are asymmetric and do not correspond to the median there are three main effects first the better candidate adopts more centrist policies than the worse candidate second the equilibrium is statistical in the sense that it predicts a probability distribution of outcomes rather than a single degenerate outcome third the equilibrium varies systematically with the level of uncertainty about the location of the median voter we test these three predictions using laboratory experiments and find strong support for all three we also observe some biases and show that they can be explained by quantal response equilibrium

increasing competition and the winner s curse evidence from procurement we assess empirically the effects of the winner s curse which in common value auctions counsels more conservative bidding as the number of competitors increases first we construct an econometric model of an auction in which bidders preferences have both common and private value components and propose a new monotone quantile approach which facilitates estimation of this model second we estimate the model using bids from procurement auctions held by the state of new jersey for a large subset of these auctions we find that median procurement costs rise as competition intensifies in this setting then asymmetric information overturns the common economic wisdom that more competition is always desirable

candidate quality the personal vote and the incumbency advantage in congress most political observers agree that incumbent legislators have a considerable advantage over nonincumbents in modern congressional elections yet there is still disagreement over the exact source of this advantage and the explanation for its growth over time to address this debate we utilize a unique set of historical elections data to test for the presence of an incumbency advantage in late nineteenth century house elections 1872 1900 we find a modest direct effect of incumbency and a substantial candidate quality effect moreover the cartel like control of ballot access by nineteenth century political parties created competition in races that the modern market like system simply does not sustain our results suggest that candidate quality is a fundamental piece of the puzzle in understanding the historical development of the incumbency advantage in american politics

representation through legislative redistricting a stochastic model this paper builds a stochastic model of the processes that give rise to observed patterns of representation and bias in congressional and state legislative elections the analysis demonstrates that partisan swing and incumbency voting concepts from the congressional elections literature have determinate effects on representation and bias concepts from the redistricting literature the model shows precisely how incumbency and increased variability of partisan swing reduce the responsiveness of the electoral system and how partisan swing affects whether the system is biased toward one party or the other incumbency and other causes of unresponsive representation also reduce the effect of partisan swing on current levels of partisan bias by relaxing the restrictive portions of the widely applied uniform partisan swing assumption the theoretical analysis leads directly to an empirical model enabling one more reliably to estimate responsiveness and bias from a single year of electoral data applying this to data from seven elections in each of six states the paper demonstrates that redistricting has effects in predicted directions in the short run partisan gerrymandering biases the system in favor of the party in control and by freeing up seats held by opposition party incumbents increases the system s responsiveness bipartisan controlled redistricting appears to reduce bias somewhat and dramatically to reduce responsiveness nonpartisan redistricting processes substantially increase responsiveness but do not have as clear an effect on bias however after only two elections prima facie evidence for redistricting effects evaporate in most states finally across every state and type of redistricting process responsiveness declined significantly over the course of the decade this is clear evidence that the phenomenon of vanishing marginals recognized first in the u s congress literature also applies to these different types of state legislative assemblies it also strongly suggests that redistricting could not account for this pattern

some problems in studying the effects of resource allocation in congressional elections after analyzing 1 data aggregated to the congressional district level and 2 individual level data from the 1978 cps election survey johannes and mcadams conclude that congressional casework has no electoral impact the following commentary explains such null findings as the product of oversimplistic expectations and methodological weaknesses specifically the johannes and mcadams aggregate data analysis is misspecified on two counts first it attempts to reduce to a single regression equation a temporal sequence in which casework activity and electoral outcomes are mutually intertwined second even were such a drastic reduction possible the single equation employed would be poorly specified because of inattention to the differential productivity of cases constituents and representatives the individual level analysis also is rife with statistical problems chief among which is multicollinearity aggravated by small numbers of cases analyses that do what is possible to minimize such problems reveal a statistically and substantively significant impact of casework on electoral outcomes further analyses that go beyond the johannes and mcadams limitation of casework effects to the individuals directly helped suggest that the electoral effects of an incumbent s reputation for service may approach the effects of party identification

the impact of public information on bidding in highway procurement auctions a number of papers in the theoretical auction literature show that the release of information regarding the seller s valuation of an item can cause bidders to bid more aggressively this widely accepted result in auction theory remains largely untested in the empirical literature recent theoretical work has also shown that this effect can be more pronounced in auctions with larger common cost uncertainty we examine the impact of a policy change by the oklahoma department of transportation that led to the release of the state s internal estimate of the costs to complete highway construction projects we perform a differences in differences analysis comparing bidding in texas a state that had a uniform policy of revealing the same information all throughout the period of analysis to bidding in oklahoma our results show that in comparison to texas auctions the average bid in oklahoma fell after the change in engineers cost estimate ece policy this decline in bids was even larger for projects where the common uncertainty in costs is greater moreover the within auction standard deviation of bids fell after the change in ece policy with the most significant decline observed again in projects with greater common cost uncertainty

incumbency electoral safety and turnover in the house of representatives 1952 76 two hypotheses have received a great deal of attention from students of congressional elections first many analysts have concluded that an increase in the electoral value attached to incumbency accounts for the rise in incumbents victory margins observed since the mid sixties second many scholars have attributed the decline in electoral turnover to the percentage increase in victory margins analyzing the electoral histories of 13 house cohorts 1952 76 this study reexamines these two hypotheses within theframework of a quasi experimental design the results presented here in contrast to those of previous studies cast doubt on the increased incumbency effect moreover little relationship is found between an increase in electoral safety as reflected by increased victory margins and a decline in electoral turnover

capacity constraints and information revelation in procurement auctions i introduction procurement auctions are one of the most widely used mechanisms in modern economies to disburse funds for public works projects a substantial portion of these funds are spent on the construction and maintenance of roads and highways an activity on which the u s government for instance spends 160 billion annually in this article we examine the bidding behavior of experimental participants in order to shed light on the strategic incentives generated by these auctions our investigation is centered on two observations made in the existing literature in a typical state level procurement auction held in the united states firms submit sealed bids for a particular project that has been advertised in advance by the state s department of transportation subject to some qualifications the lowest bidder wins the project and is paid the amount of its bid empirical work analyzing these auctions has found that construction firms suffer from capacity constraints whereby a firm with a larger backlog of preexisting work commitments finds it more costly to add new work to its roster de silva dunne and kosmopoulou 2003 jofre bonet and pesendorfer 2003 1 bidders with larger backlogs therefore tend to submit higher bids and win fewer auctions because a typical department of transportation auctions off hundreds of such projects a year capacity constraints create an intertemporal linkage between adjacent auctions a bidder that wins a given auction incurs an opportunity cost in terms of forgoing expected profits in future auctions on account of its anticipated higher costs our first research question therefore is how does the presence of capacity constraints affect the bidding behavior of experiment participants our second research question is inspired by the fact that procurement markets have been found to be vulnerable to collusion by bidders bajari and ye 2003 porter and zona 1993 in most states contracts are typically won by a small set of firms that interact repeatedly in procurement auctions over the course of the year this can provide an ideal setting for a bid rigging scheme in procurement auctions where firms compete by setting prices observing the prices set by one s rivals can be crucial to the feasibility of any collusive scheme porter 2005 if bidders are not colluding and if past bids are not correlated with current costs then observing a rival s past bids will not lead to observable variation in a firm s bids if however firms are attempting to collude a change in the bid revelation policy of the procurer might lead to a measurable change in bids thus revealing the past bids of players can influence their strategic behavior as it alters the ways in which they can provide information to each other about their strategies even in the absence of explicit collusion when all bids are revealed a firm may be able to signal its desire to tacitly collude by submitting noncompetitive bids 2 this leads us to the question what is the effect of varying the amount of information revealed about past bids on the current bids of experimental participants competing in dynamic auctions the answer to this question may be useful for policy makers given that currently most state departments of transportation in the united states publicize all the bids from past auctions the central contribution of our article is to answer the two questions posed with evidence collected from laboratory economic experiments in the experimental sessions bidders play one shot two round and infinite horizon procurement auction games where winning an auction can increase a bidder s cost in the next auction in half of the experimental sessions only the winning bid is revealed after each auction this is done to restrict the amount of information that is shared between bidders explicit communication is not allowed in the other half of the sessions we reveal winning and losing bids at the conclusion of each auction

the potentials of a reverse auction in allocating subsidies for cost effective roof top photovoltaic system deployment abstract photovoltaic pv has developed to one of the most promising technologies for renewable electricity generation the austrian government currently provides subsidies for roof top pv systems through a constant administratively determined feed in tariff or an investment co funding in both subsidy schemes applications are approved on a first come first served basis there are concerns about i the selection of suitable roofs for pv systems and ii allocating subsidies among applicants to deploy roof top pv systems cost effectively thus we analyze the potentials of a simple discriminative first price reverse auction application scheme applicants define individually the required level of subsidy and those with the lowest request for subsidies are selected in an ex post analysis we evaluate the potentials of such a scheme in increasing power output and saving public spending for the federal state of vorarlberg in austria results indicate a potential increase of cumulated produced electricity between 15 and 18 in comparison to the current policy in addition a reverse auction based system would lead to savings of public spending per kwh between 20 and 41

systematically dependent competing risks and strategic retirement in many applications of survival analysis the risk of an event occurring for one reason is dependent on the risk of the same event occurring for another reason for example when politicians suspect they might lose an election they may strategically choose to retire in such situations the often used multinomial logit model suffers from bias and underestimates the degree of strategic retirement for example to what extent poor prior electoral performance diminishes electoral prospects to address this problem the present article proposes a systematically dependent competing risks sdcr model of survival analysis unlike the frailty model the sdcr model can also deal with more than two risks monte carlo simulation demonstrates how much the sdcr model reduces bias reanalysis of data on u s congressional careers box steffensmeier and jones 2004 documents the strategic retirement of representatives indicating that electoral pressure is more effective at turning out incumbents than previously recognized

an analysis of congressional career decisions 1947 1986 most previous research on congressional career decisions has focused on one of two binary choices between retiring and running for reelection or between running for reelection and seeking higher office but most of the time representatives face all three choices simultaneously employing a mother logit model we estimate the effects of relevant variables both on pairwise comparisons conditional probabilities and on the unconditional probabilities of choosing each one of these three alternatives probably most intriguing is our finding that a member s age has little or no effect upon the unconditional probability of running for reelection the interrelatedness of career options is seen particularly clearly in the case of incumbents who had been redistricted out of their seats when they had an opportunity to run for higher office they were likely to take it only when they lacked such an opportunity were they more likely than other members to opt for retirement

presidential party incumbency and the effects of economic fluctuations on house elections 1916 1996 there is little professional consensusregarding the effect of economic conditionson house elections we argue that recentwork still uses the paradigm of party toorganize their data and tests given thatrecent developments in the theory ofcongress emphasize the paradigm ofincumbency we investigate the empiricalrelevance of that competing paradigm weshow that 1 incumbency matters in a purepresidential party model of houseelections 2 presidential party mattersin a pure incumbency model 3 once bothparty and incumbency are accounted for economic conditions exert a highlysignificant and temporally stable influenceon house elections 4 return rates aremore affected by economic fluctuations thanare vote shares and 5 not allpresidential party incumbents face the samedegree of electoral accountability foreconomic fluctuations

estimating incumbency advantage without bias in this paper we prove theoretically and demonstrate empirically that all existing measures of incumbency advantage in the congressional elections literature are biased or inconsistent we then provide an unbiased estimator based on a very simple linear regression model we apply this new method to congressional elections since 1900 providing the first evidence of a positive incumbency advantage in the first half of the century incumbency advantage is the most frequently studied factor in the last 15 years of congressional elections research discovery of the increase in incum bency advantage has sparked controversy over its origins historical pattern cur rent magnitude and electoral democratic and policy consequences even the most basic descriptive information about incumbency advantage is flawed be cause every previous measure based on aggregate data in this literature is plagued by selection bias inconsistencies and inefficiencies we prove this result and also propose a new unbiased and statistically efficient measure that is very easy to calculate congressional elections from 1900 to the present fit our theoretical model our empirical reanalyses do not challenge the existing scholarly consen sus that incumbency advantage is much larger than it once was however we do challenge the prevailing belief that incumbency advantage was nonexistent and the evidence that it was negative in house elections during the first half of this century alford and brady 1988 we show instead that the average advantage of incumbency in these elections was about two percentage points in section 1 of this paper we define incumbency advantage and section 2 gives an intuitive sense of the problems identifying it even in ideal electoral sys tems section 3 formally proves that sophomore surge and retirement slump are biased estimates of incumbency advantage and section 4 briefly reveals the flaws

using threshold cointegration to estimate asymmetric price transmission in the swiss pork market this paper employs threshold cointegration tests that allow for asymmetric adjustment towards a long run equilibrium relationship to examine the relationship between producer and retail pork prices in switzerland the short run adjustments are also examined with asymmetric error correction models that are compared to the conventional symmetric error correction models the results indicate that price transmission between the producer and retail levels is asymmetric in the sense that increases in producer prices that lead to declines in marketing margins are passed on more quickly to retail prices than decreases in producer prices that result in increases in the marketing margins

information returns and bidding behavior in ocs auctions 1954 1969 this paper examines federal auctions for leases on the outer continental shelf in the light of the predictions of the first price sealed bid common values model of auctions the authors find that the data strongly support the model for auctions in which one bidder is better informed than the other bidders the evidence for auctions in which bidders have noisy but qualitatively similar information is less conclusive but is consistent with a model in which each bidder does not know either the actual or potential number of bidders on a lease copyright 1987 by blackwell publishing ltd

economic voting and the symbolic politics argument a reinterpretation and synthesis economic voting is generally regarded as a straightforward political demand for the amelioration of economic grievances this assumption about motives underlies the implicit theories of politicians and the imputations of interests to voters in aggregate time series models several recent articles have argued that voting is not self interested but a manifestation of symbolic preferences at the level of the collectivity this article places the dispute between personal and collective decision referents into the broader perspective of a multi stage model of information processing and decision making personal and collective decision referents are shown to define the poles of a continuum and several hypotheses are derived to predict the relative weights assigned to each in the voter s calculus the model is used in analyses of both the public s evaluations of incumbent economic management and economic voting in different electoral arenas by varying issue publics designed to maximize comparability with aggregate studies this research includes both objective and subjective measures of economic conditions and indexes changes in personal conditions over time from panel data