home and away graduate experience from a regional perspective the recent establishment of regional assemblies adds a further policy dimension to higher education this paper consists of an empirical analysis of the choices made by the 1991 northern ireland cohort of entrants to higher education to stay in or leave northern ireland for universities and subsequently then for employment the data indicate that the probability to leave was firmly linked to a level scores though this interacted with religion and social class the choice of labour market for most students reflected the location of university those who returned to northern ireland after graduation were less able and earned less on average than those who remained employment in the locality of the university improves earnings possibly due to the information this generates for both parties

robust assortment optimization in revenue management under the multinomial logit choice model we study robust formulations of assortment optimization problems under the multinomial logit choice model the novel aspect of our formulations is that the true parameters of the logit model are assumed to be unknown and we represent the set of likely parameter values by a compact uncertainty set the objective is to find an assortment that maximizes the worst case expected revenue over all parameter values in the uncertainty set we consider both static and dynamic settings the static setting ignores inventory consideration whereas in the dynamic setting there is a limited initial inventory that must be allocated over time we give a complete characterization of the optimal policy in both settings show that it can be computed efficiently and derive operational insights we also propose a family of uncertainty sets that enables the decision maker to control the trade off between increasing the average revenue and protecting against the worst case scenario numerical experiments show that our robust approach combined with our proposed family of uncertainty sets is especially beneficial when there is significant uncertainty in the parameter values when compared to other methods our robust approach yields over 10 improvement in the worst case performance but it can also maintain comparable average revenue if average revenue is the performance measure of interest

haggling over substitutes abstract using a model of substitutable goods i determine generic conditions on tastes which guarantee that fixed prices are not optimal the fully optimal tariff includes lotteries that is a profit maximising seller would employ a haggling strategy we show that the fully optimal selling strategy in a class of cases requires a seller to not allow themselves to focus on one good but to remain haggling over more than one good this throws new light on the selling strategies used in diverse industries these insights are used to provide a counter example to the no lotteries result of mcafee and mcmillan j econ theory 46 1988 335

competition between private and public schools vouchers and peer group effects a theoretical and computational model with tax financed tuition free public schools and competitive tuition financed private schools is developed students differ by ability and income achievement depends on own ability and on peers abilities equilibrium has a strict hierarchy of school qualities and two dimensional student sorting with stratification by ability and income in private schools high ability low income students receive tuition discounts while low ability high income students pay tuition premia tuition vouchers increase the relative size of the private sector and the extent of student sorting and benefit high ability students relative to low ability students

bundling as an optimal selling mechanism for a multiple good monopolist abstract multiple objects may be sold by posting a schedule consisting of one price for each possible bundle and permitting the buyer to select the price bundle pair of his choice we identify conditions that must be satisfied by any price schedule that maximizes revenue within the class of all such schedules we then provide conditions under which a price schedule maximizes expected revenue within the class of all incentive compatible and individually rational mechanisms in the n object case we use these results to characterize environments mainly distributions of valuations where bundling is the optimal mechanism in the two and three good cases

robust auctions for revenue via enhanced competition in robust auctions for revenue via enhanced competition t roughgarden i talgam cohen and q yan revisit the classic bulow klemperer result this result compares the revenues of two well know

a new bid price approach to dynamic resource allocation in network revenue management abstract firms selling perishable products use a variety of techniques to maximize revenue through the dynamic control of their inventories one of the most powerful and simple approaches to address this issue consists of assigning threshold values bid prices to each resource and to accept requests whenever their revenue exceeds the sum of the bid prices associated with its constituent resources in this context we propose a new customer choice based mathematical program to estimate time dependent bid prices in contrast with most approaches from the current literature ours is characterized by its flexibility indeed it can easily embed technical and practical constraints that occur in most central reservation systems crs to solve the model we develop a column generation algorithm in which the np hard subproblem is addressed via an efficient heuristic procedure our computational results illustrate the performance of the method through comparisons with alternative proposals

multidimensional incentive compatibility and mechanism design abstract incentive compatibility conditions are characterized in general for problems in which several goods are to be allocated and agents types are multidimensional two questions of monopoly pricing under multidimensional uncertainty are then analyzed first we find the optimal nonlinear pricing scheme when the monopolist knows only the distribution of an arbitrarily parameterized family of demand curves and second we solve for the optimal bundling policy for a multiproduct monopolist

intertemporal price discrimination with two products we study the two product monopoly profit maximization problem for a seller who can commit to a dynamic pricing strategy we show that if consumers valuations are not strongly ordered then optimality for the seller can require intertemporal price discrimination the seller offers a choice between supplying a complete bundle now or delaying the supply of a component of that bundle until a later date for general valuations we establish a sufficient condition for such dynamic pricing to be more profitable than mixed bundling so we show that the established no discrimination across time result does not extend to two product sellers under standard taste distributions

student and worker mobility under university and government competition we provide a normative analysis of endogenous student and worker mobility in the presence of diverging interests between universities and governments student mobility generates a university competition effect which induces them to overinvest in education whereas worker mobility generates a free rider effect for governments who are not willing to subsidize the education of agents who will work abroad at equilibrium the free rider effect always dominates the competition effect resulting in underinvestment in human capital this inefficiency can be corrected under exogenous university budgets if a transnational transfer for mobile students is implemented with endogenous income taxation under the non cooperative equilibrium between governments the combination of the free rider effect and fiscal competition leads to underinvestment in both teaching and research furthermore the transnational transfer no longer restores efficiency instead it can reinforce fiscal competition and imposes a tradeoff between research and human capital

optimal selling strategies when to haggle when to hold firm a seller encountering risk neutral buyers one at a time should if commitments are feasible quote a single take it or leave it price to each this strategy is superior to any other for finite or infinite buyer populations whether there is learning or the distribution of buyer prices is known at the outset with one object for sale or many although haggling may offer advantages in terms of price discrimination these gains are more than offset by the losses it generates by encouraging buyers to refuse purchases at high prices

optimal multi unit mechanisms with private demands abstract a seller can produce multiple units of a single good the buyer has constant marginal value for each unit she receives up to a demand and zero marginal value for units beyond the demand the marginal value and the demand are drawn from a distribution and are privately known to the buyer we show that under natural regularity conditions on the distribution the optimal revenue maximizing selling mechanism is deterministic it is a price schedule that specifies the payment based on the number of units purchased further under the same conditions the revenue as a function of the price schedule is concave which in turn implies that the optimal price schedule can be found in polynomial time we give a more detailed characterization of the optimal prices when there are only two possible demands

competition in the presence of individual demand uncertainty this article offers a tractable model of oligopolistic competition in differentiated product markets characterized by individual demand uncertainty the main result shows that in equilibrium firms offer advance purchase discounts and that these discounts are larger than in the monopolistic benchmark competition reduces welfare by increasing the fraction of consumers who purchase in advance that is without full knowledge of their preferences

saving and liquidity constraints this paper is concerned with the theory of saving when consumers are not permitted to borrow and with the ability of such a theory to account for some of the stylized facts of saving behavior the models presented in the paper seem to account for important aspects of reality that are not explained by traditional life cycle models copyright 1991 by the econometric society

can a brain drain be good for growth in the source economy this paper analyzes the interaction between income distribution human capital accumulation and migration it shows that when migration is not a certainty a brain drain may increase average productivity and equality in the source economy even though average productivity is a positive function of past average levels of human capital in an economy it is also shown how the temporary possibility of emigration may permanently increase the average level of productivity of an economy

the role of the agent s outside options in principal agent relationships abstract we consider a principal agent model of adverse selection where in order to trade with the principal the agent must undertake a relationship specific investment which affects his outside option to trade i e the payoff that he can obtain by trading with an alternative principal this creates a distinction between the agent s ex ante before investment and ex post after investment outside options to trade we investigate the consequences of this distinction and show that whenever an agent s ex ante and ex post outside options differ this may equip the principal with an additional tool for screening among different agent types by randomizing over the probability with which trade occurs once the agent has undertaken the investment in turn this may enhance the efficiency of the optimal second best contract

mobility and redistribution the ability of individuals to move freely from one jurisdiction to another is generally seen as a constraint on the amount of redistribution that each jurisdiction within a system of governments can undertake in this paper we look at this proposition by developing a positive analysis of income redistribution by local governments in a federal system we ask how much redistribution occurs when only local governments can have tax transfer instruments individuals can move freely among jurisdictions and voters in each jurisdiction are fully aware of the migration effects of redistributive policies local redistribution is shown to induce sorting of the population with the poorest households located in the communities that provide the most redistribution while the threat of out migration affects the potential for redistribution our results suggest that significant local redistribution is nonetheless feasible numerical computations indicate that the proportion of residents who are renters is a major factor affecting the local choice of level of redistribution

network revenue management with inventory sensitive bid prices and customer choice we develop an approximate dynamic programming approach to network revenue management models with customer choice that approximates the value function of the markov decision process with a non linear function which is separable across resource inventory levels this approximation can exhibit significantly improved accuracy compared to currently available methods it further allows for arbitrary aggregation of inventory units and thereby reduction of computational workload yields upper bounds on the optimal expected revenue that are provably at least as tight as those obtained from previous approaches computational experiments for the multinomial logit choice model with distinct consideration sets show that policies derived from our approach can outperform some recently proposed alternatives and we demonstrate how aggregation can be used to balance solution quality and runtime

revenue management under a general discrete choice model of consumer behavior customer choice behavior such as buy up and buy down is an important phenomenon in a wide range of revenue management contexts yet most revenue management methodologies ignore this phenomenon or at best approximate it in a heuristic way in this paper we provide an exact and quite general analysis of this problem specifically we analyze a single leg reserve management problem in which the buyers choice behavior is modeled explicitly the choice model is very general simply specifying the probability of purchase for each fare product as a function of the set of fare products offered the control problem is to decide which subset of fare products to offer at each point in time we show that the optimal policy for this problem has a quite simple form namely it consists of identifying an ordered family of efficient subsets s 1 s m and at each point in time opening one of these sets s k where the optimal index k is increasing in the remaining capacity x and decreasing in the remaining time that is the more capacity or less time available the further the optimal set is along this sequence we also show that the optimal policy is a nested allocation policy if and only if the sequence of efficient sets is nested that is s 1 s 2 s m moreover we give a characterization of when nesting by fare order is optimal we also develop an estimation procedure for this setting based on the expectation maximization em method that jointly estimates arrival rates and choice model parameters when no purchase outcomes are unobservable numerical results are given to illustrate both the model and estimation procedure

dynamic adverse selection with a patient seller abstract this paper considers dynamic bilateral trade with short term commitment we show that when the seller is more patient than the buyer there exist systematic differences between the optimal selling and renting mechanisms while the former consists of simple price posting the latter induces the buyer to choose between a secure and a random delivery contract allowing for mechanisms more general than price posting reduces the seller s cost of learning the buyer s valuation in the renting case renting leads to more learning than selling but unless the horizon is sufficiently long only when general mechanisms are available our results contrast with the common view that the restriction to price posting is innocuous and that informational asymmetries are more persistent under renting than under selling

bargaining over a menu of wage contracts we investigate an infinite horizon bargaining problem in which a firm and a worker bargain over two dimensions quality and wage the worker has private information about his type only the uninformed firm makes an offer and it can offer a menu of quality wage contracts instead of single one we show that for all discount factors the unique sequential equilibrium outcome is separating without delay the firm separates the types of worker with a menu of contracts in the first period our result shows that in multi dimensional bargaining the coase conjecture holds in the sense that the game ends in the first period but it fails in the sense that the uninformed party can preserve the entire bargaining power

an analysis of bid price controls for network revenue management bid prices are becoming an increasingly popular method for controlling the sale of inventoryin revenue management applications in this form of control threshold or bid prices are set for the resources or units of inventory seats on flight legs hotel rooms on specific dates etc and a product a seat in a fare class on an itinerary or room for a sequence of dates is sold only if the offered fare exceeds the sum of the threshold prices of all the resources needed to supply the product this approach is appealing on intuitive and practical grounds but the theory underlying it is not well developed moreover the extent to which bid price controls represent optimal or near optimal policies is not well understood using a general model of the demand process we show that bid price control is not optimal in general and analyze why bid price schemes can fail to produce correct accept deny decisions however we prove that when leg capacities and sales volumes are large bid price controls are asymptotically optimal provided the right bid prices are used we also provide analytical upper bounds on the optimal revenue in addition we analyze properties of the asymptotically optimal bid prices for example we show they are constant over time even when demand is nonstationary and that they may not be unique

labor market integration investment in risky human capital and fiscal competition this paper presents a general equilibrium model where human capital investment increases specialization and exposes skilled workers to region specific earnings risk interjurisdictional mobility of skilled labor mitigates these risks state contingent migration of skilled labor also improves efficiency with perfect capital markets labor market integration raises welfare and reduces ex post earnings inequality if instead human capital investment can only be financed through local taxes labor market integration leads to interjurisdictional fiscal competition shifting the burden of taxation to low skilled immobile workers decentralized public provision of human capital investment creates earnings inequalities and is inefficient

local property and state income taxes the role of interjurisdictional competition and collusion this paper addresses two long standing positive questions in public finance i why is the property tax despite widespread popular complaints against its fairness the almost exclusive tax instrument used by local governments and ii why do we consistently observe higher levels of governments states undermining local property tax systems through income tax funded grants and state imposed caps on local property tax rates a new intuitive argument to explain question is presented and tested in simulations using a computable general equilibrium model with parameters set to be consistent with new jersey data both the intuitive argument and the simulation results indicate that setting local income tax rates to zero is a dominant strategy for community planners when faced with popular sentiment against the property tax community planners can collude and introduce local income taxes simultaneously to prevent adverse general equilibrium migration and price changes since zero income tax rates are dominan

if you tourist behave irrationally i ll find you abstract when departures from rational behavior can potentially be expected modeling should allow for their identification and their quantification in this regard prices in tourism might have effects that may not be as apparent as economic theory predicts this article incorporates the sticker shock formulation into the mixed logit model without imposing consistency with consumer theory to accommodate any possible positive or negative price effects by allowing the parameters of price and sticker shock term to take any value negative or positive we detect abnormal behaviors in the tourist demand not only is the negative relationship between price and demand inverted for some people but also some tourists might be willing to accept higher than expected prices the non well behaved groups shares are estimated

factor mobility risk and redistribution in the welfare state economic integration reduces the costs of factor mobility producing efficiency gains and contributing to equalization of net factor returns this raises the cost of income redistribution policy thus threatening a basic function of the welfare state a simple model of costly factor mobility under uncertainty shows that greater factor mobility enables factor owners to pool industry specific region specific or occupation specific risks due to uncertain technology or terms of trade economic integration may thus reduce some of the potential social insurance benefits of redistributive policy

multiproduct nonlinear pricing typically work on mechanism design has assumed that all private information can be captured in a single scalar variable this paper explores one way in which this assumption can be relaxed in the context of the multiproduct nonlinear pricing problem it is shown that the firm will choose to exclude some low value consumers from all markets a class of cases that allow explicit solution is derived by making use of a multivariate form of integration by parts in such cases the optimal tariff is cost based

equilibrium and inefficiency in a community model with peer group effects public service output depends on input expenditures on own personal characteristics and on the characteristics of the other residents in the community the peer group effect in a community model with public expenditures set by voting with migration between communities and with land price differentials capitalization it is shown that communities may become heterogeneous in composition and second best inefficient this equilibrium occurs when the peer group effect is neither too strong nor too weak the inefficiency arises because an externality is created by migration the land price differential does not play the part of the price of the better peer group but of a transfer payment

competition for migrants in a federation tax or transfer competition this paper provides an analysis of competition for migrants competing in taxes transfers renders migration flows less more elastic with respect to changes in fiscal policy jurisdictions with aligned preferences i e jurisdictions that maximize the interest of the same type of households either mobile or immobile households prefer to reduce the competitive pressure and compete in taxes jurisdictions with distinct preferences on the other hand prefer to expose themselves to more competitive pressure and compete in transfers this paper offers insights into the optimal use and design of transfers and helps interpret existing empirical evidence

approximation in mechanism design this paper considers three challenge areas for mechanism design and describes the role approximation plays in resolving them challenge 1 optimal mechanisms are finely tuned to precise details of the distribution on agent preferences challenge 2 in environments with multi dimensional agent preferences economic analysis has failed to provide general characterizations optimal mechanisms challenge 3 optimal mechanisms are parameterized by unrealistic knowledge of the distribution of agents private preferences this paper surveys positive resolutions to these challenges with emphasis on basic techniques and their relevance to theory and practice

imperfect mobility and local government behaviour in an overlapping generations model abstract this paper reconsiders the implications of land value maximizing local governments in an overlapping generations model with imperfect mobility specifically residents develop an attachment to place or location specific capital once they reside in a town for a single time period the analysis shows that attempts by governments to capture the resulting rents from less mobile individuals create inefficient migration leave all workers worse off in an ex ante sense and place relatively high burdens on those workers who have high migration costs public good levels are also inefficiently chosen

where they go what they do and why it matters the importance of geographic accessibility and social class for decisions relating to higher education institution type degree level and field of study this article considers the impact of geographic accessibility and social class on school leavers when making decisions relating to higher education institution hei type degree level and field of study using a novel and comprehensive irish data set we consider a number of joint decisions facing school leavers in relation to where and what to study and employ a range of bivariate choice models which allows us to control for correlations in these decisions we find that geographic accessibility and social class play an important role in determining outcomes relating to hei type degree level and field of study we argue that these decisions are important in terms of future labour market and other outcomes for school leavers and that current policy in ireland does not go far enough in mitigating the impact of distance and socio economic barriers on these outcomes

multiproduct monopoly commodity bundling and correlation of values through what selling strategy can a multiproduct monopolist maximize his profits when his knowledge about individual consumers preferences is limited one possibility extensively studied in the context of a single good monopoly is to use quantity dependent pricing as a means of discriminating among customers with differing tastes see for example oi 1971 and maskin and riley 1984 an alternative technique for price discrimination first suggested by stigler 1968 and analyzed further by adams and yellen 1976 is for the monopolist to package two or more products in bundles rather than selling them separately through a series of examples adams and yellen illustrate that bundling can serve as a useful price discrimination device even when all consumers willingnesses to pay for each of the goods individually are unaffected by whether they are also consuming the other product a typical example is illustrated in figure i adapted from figure iv in adams and yellen where there are two goods three consumers ab c who consume at most one unit of each good with reservation values for each good that are independent of whether the other good is consumed and zero costs of production there a bundle offered at a price of 100 fully extracts all potential surplus which would be impossible pricing the goods independently unfortunately though these authors do not provide any general characterization of the circumstances in which bundling is actually a multiproduct monopolist s optimal strategy their examples however such as figure i create the impression that the profitable use of bundling

improved bid prices for choice based network revenue management one of the latest developments in network revenue management rm is the incorporation of customer purchase behavior via discrete choice models many authors presented control policies for the booking process that are expressed in terms of which combination of products to offer at a given point in time and given resource inventories however in many implemented rm systems most notably in the hotel industry bid price control is being used and this entails the problem that the recommended combination of products as identified by these policies might not be representable through bid price control if demand were independent from available product alternatives an optimal choice of bid prices is to use the marginal value of capacity for each resource in the network but under dependent demand this is not necessarily the case in fact it seems that these bid prices are typically not restrictive enough and result in buy down effects we propose 1 a simple and fast heuristic that iteratively improves on an initial guess for the bid price vector this first guess could be for example dynamic estimates of the marginal value of capacity moreover 2 we demonstrate that using these dynamic marginal capacity values directly as bid prices can lead to significant revenue loss as compared to using our heuristic to improve them finally 3 we investigate numerically how much revenue performance is lost due to the confinement to product combinations that can be represented by a bid price the heuristic is not restricted to a particular choice model and can be combined with any method that provides us with estimates of the marginal values of capacity in our numerical experiments we test the heuristic on some popular networks examples taken from peer literature we use a multinomial logit choice model which allows customers from different segments to have products in common that they consider to purchase in most problem instances our heuristic policy results in significant revenue gains over some currently available alternatives at low computational cost

an economic model of the brain drain asymmetric information in the labor market is discussed as a major cause of the exodus of foreign trained students from developing countries the authors suggest that employers in the country in which the students have been trained have a more accurate judgment of the true productivity of students than have employers in the students native country an illustrative numerical model is developed and its implications are analyzed annotation

utilitarianism and horizontal equity the case for random taxation this paper establishes that far from being able to derive the principle of horizontal equity from utilitarianism the principle is actually in consistent with utilitarianism in a variety of circumstances we derive conditions under which a it is optimal to impose random tax schedules ex post randomization and b it is optimal to randomize the tax schedules imposed on a set of otherwise identical individuals ex ante randomization the implications for optimal tax theory are discussed more generally it is shown that there are a number of potentially important economic situations with which the principle of horizontal equity may be inconsistent not only with utilitarianism but even with pareto optimality this abstract was borrowed from another version of this item

the role of optimal threats in auction design abstract this paper studies revenue maximizing auctions when buyers outside options depend on their private information and are endogenously chosen by the seller we show that the revenue maximizing assignment of the object can depend crucially on the outside options that the seller can choose as threats depending on the shape of outside options sometimes an optimal mechanism allocates the object in an ex post efficient way and other times buyers obtain the object more often than is efficient

optimal bundle pricing under correlated valuations abstract we study optimal pricing issues for a monopolist selling two indivisible goods to a continuum of consumers with correlated private valuations over the goods where the positive or negative correlation is modeled using copulas in the frechet family we derive explicit optimal pricing schemes and comparative statics results for various environments in our setting the optimal pricing schemes can take several forms including pure bundling partial mixed bundling and mixed bundling depending jointly on the degrees of asymmetry and correlation of the consumers valuations the explicit optimal pricing schemes also enable us to investigate whether and how the monopolist s profit can be further improved via random assignments

the power of randomness in bayesian optimal mechanism design abstract we investigate the power of randomness in the context of a fundamental bayesian optimal mechanism design problem a single seller aims to maximize expected revenue by allocating multiple kinds of resources to unit demand agents with preferences drawn from a known distribution when the agents preferences are single dimensional myerson s seminal work 1981 shows that randomness offers no benefit the optimal mechanism is always deterministic in the multi dimensional case when agents preferences are arbitrarily correlated briest et al 2010 showed that the gap between the expected revenue obtained by an optimal randomized mechanism and an optimal deterministic mechanism can be unbounded even when a single agent is offered only 4 services we show that when the agents values involve no correlation or a specific kind of positive correlation the benefit of randomness is only a small constant factor