substitute goods auctions and equilibrium this paper identifies two notions of substitutes for auction and equilibrium analysis weak substitutes the usual price theory notion guarantees monotonicity of t tonnement processes and convergence of clock auctions to a pseudo equilibrium but only strong substitutes which treats each unit traded as a distinct good with its own price guarantees that every pseudo equilibrium is a walrasian equilibrium that the vickrey outcome is in the core and that the law of aggregate demand is satisfied when goods are divisible weak substitutes along with concavity guarantees all of the above properties except for the law of aggregate demand

auctions of heterogeneous objects abstract simultaneous sealed bid auctions of heterogeneous objects are analyzed each bidder s reservation value for an object depends upon the other objects he obtains bidders reservation values are common knowledge in simultaneous first price auctions the set of walrasian equilibrium allocations contains the set of pure strategy nash equilibrium allocations which in turn contains the set of strict walrasian equilibrium allocations hence pure strategy nash equilibria when they exist are efficient mixed strategy nash equilibria may be inefficient in simultaneous second price auctions any efficient allocation can be implemented as a pure strategy nash equilibrium outcome if a walrasian equilibrium exists journal of economic literature classification numbers d44 d51

a rank dependent utility model of uncertain lifetime abstract in a continuous time life cycle model of consumption with an uncertain lifetime we use a non parametric specification of rank dependent utility theory to characterize the preferences of the agent we prove that time consistency holds for a subclass of probability weighting function providing the foundation for a constant rate of time preference that interacts multiplicatively with the hazard rate instead of additively as in the yaari 1965 seminal model we calibrate both models to explain the hump in the life cycle consumption and show that the multiplicative model is more robust

walrasian equilibrium with gross substitutes in this paper we study the problem of efficient production and allocation of indivisible objects among a set of consumers we assume that the agents preferences depend on the bundle of objects and the quantity of money they consume furthermore we assume that preferences are quasilinear in money and that agents have a large endowment of money with indivisibilities it is well known that many familiar properties of the utility functions fail to ensure existence in their striking analysis of the matching problem kelso and crawford 5 introduce the gross substitutes gs condition which ensures the non emptiness of the core we propose two new conditions and show that with quasilinearity they are equivalent article id jeth 1999 2531 available online at http www idealibrary com on

designing products and services for consumer welfare theoretical and empirical issues in this paper we examine the theoretical and empirical issues that arise for a public sector decision maker who wishes to use the target population s preferences as an input for designing new products and services the marketing literature suggests using essentially the same approach as that for the private sector problem with one exception instead of maximizing profits share or volume the sum of benefits to society is maximized however the social welfare literature has suggested several other measures of welfare and shows that no single welfare function dominates all others therefore to choose an appropriate welfare function to maximize the decision maker must first examine the theoretical and empirical similarities between the alternatives for six prominent welfare functions we examine the theoretical differences in terms of the notion of fairness promoted and the kind of preference data required empirically we examine the similarities in social rankings and first choices induced by these welfare functions under various preference configurations we also examine their sensitivity to measurement error and preference normalization

evaluating decision strategies for equity of public risks many important decisions include the loss of life among their possible consequences alternative actions have different implications for the number of possible fatalities the equity of those eventual fatalities and the equity of the process resulting in those fatalities this paper defines a concept of ex ante risk equity to address the equity of the process and distinguishes this concept from the ex post risk equity of the fatalities the paper indicates that an analysis of decision strategies addresses ex ante equity in this context both types of equity as well as loss of life are included in a von neumann morgenstern utility model developed to evaluate public risks this approach provides a method to investigate the implications of different value judgments in examining alternatives and illustrates an appropriate use of von neumann morgenstern utility for problems involving social consequences such as public risks

time inconsistent preferences and the annuitization decision good news can involve difficult decisions for example winning a lottery jackpot can go along with the decision whether to have the jackpot paid out immediately as a lump sum or as periodic annual payments also when entering retirement most people face the decision whether they want their defined contribution account balance paid as a lump sum or to annuitize that amount the fact that people tend to choose the lump sum even if economic reasons suggest that they should choose the annuity is called the annuity paradox in a large online survey we find that people behave time inconsistent older people have a stronger tendency to choose the lump sum than younger people when they are asked to predict today what to choose when they retire this effect is considerably stronger for participants that answer simple time preference questions inconsistently our findings suggest to think about precommitment devices for the annuitization decision in the retirement case already at the time when the defined benefit plan is started

the reasonableness of non constant discounting abstract the typical method for valuing the future goods and harms of a public policy alternative is by means of a constant annual discount rate this paper examines the reasonableness for public policy analysis of non constant discounting methods that unlike constant discounting can accord considerable importance to outcomes in the distant future we examine temporal consistency and economic efficiency as reasons for the use of constant discounting and we argue that these reasons do not apply for a public policy choice whose effects are long range and irreversible

multiple unit auctions with economies and diseconomies of scale abstract this paper discusses multiple unit auctions for industrial procurement where the cost structures of suppliers capture economies and diseconomies of scale caused by the nature of the production cost and the opportunity value of suppliers capacities the problem of winner determination and demand allocation is proven to be np complete we propose a binary tree algorithm with bounds btb which efficiently exploits the model s optimality properties btb outperforms general integer optimization software in computational time especially with existence of substantial economies and diseconomies of scale the algorithm complexity is linear in demand volume this property allows for efficient handling of high volume auctions and thus leads to increased benefit for the overall system under the assumption of the myopic best response strategies we investigate the behavior of suppliers and price dynamics for iterative multiple round bidding with appropriate allocation and stopping rules the allocation rules featured by several tie breakers for multiple optimal solutions to the allocation model in each round are proposed to induce suppliers dominant strategies and to improve the system s performance

the evolution of hyperbolic discounting implications for truly social valuation of the future abstract we explore the standard expected utility model and alternatives to it we then examine the behavioral and neurological evidence for hyperbolic discounting we discuss evidence related to the neurological and behavioral evolution of discounting in non human animals and in humans we explore new findings about the importance of sociality in human behavior and the implications for truly social time preference finally we discuss the implications of the neurological evidence on discounting for social environmental valuation in particular the implications for very long run decisions such as those involved in climate change mitigation and biodiversity preservation

stochastic diffusion models with advertising and word of mouth effects abstract this paper presents a stochastic diffusion model which incorporates advertising word of mouth effects the model defines a 3 variate stochastic process based on explicit assumptions regarding consumer behavior and consumers response to advertising the model generalizes a wide variety of advertising models and in addition includes several classes of consumers interaction effects between these consumers and of course a stochastic framework that may be used for assessing the risk implications of advertising policies and for empirical analyses purposes

simultaneous auctions without complements are almost efficient abstract a simultaneous item auction is a simple procedure for allocating multiple indivisible goods to a set of bidders in a simultaneous auction every bidder submits bids on all items simultaneously the allocation and prices are then resolved for each item separately based solely on the bids submitted on that item such procedures are similar to auctions used in practice e g ebay but are not incentive compatible we study the efficiency of bayesian nash equilibrium bne outcomes of simultaneous first and second price auctions when bidders have complement free a k a subadditive valuations we show that the expected social welfare of any bne is at least 1 2 of the optimal social welfare in the case of first price auctions and at least 1 4 in the case of second price auctions

time tradeoff sequences for analyzing discounting and time inconsistency this paper introduces time tradeoff tto sequences as a general tool to analyze intertemporal choice we give several applications for empirical purposes we can measure discount functions without requiring any measurement of or assumption about utility we can quantitatively measure time inconsistencies and simplify their qualitative tests tto sequences can be administered and analyzed very easily using only pencil and paper for theoretical purposes we use tto sequences to axiomatize quasi hyperbolic discount functions we demonstrate the feasibility of measuring tto sequences in an experiment in which we tested the axiomatizations our findings suggest rejections of several currently popular discount functions and call for the development of new ones it is especially desirable that such discount functions can accommodate increasing impatience

non hyperbolic time inconsistency the commonly used hyperbolic and quasi hyperbolic discount functions have been developed to accommodate decreasing impatience which is the prevailing empirical finding in intertemporal choice in particular for aggregate behavior however these discount functions do not have the flexibility to accommodate increasing impatience or strongly decreasing impatience this lack of flexibility is particularly disconcerting for fitting data at the individual level where various patterns of increasing impatience and strongly decreasing impatience will occur for a significant fraction of subjects this paper presents discount functions with constant absolute cadi or constant relative crdi decreasing impatience that can accommodate any degree of decreasing or increasing impatience in particular they are sufficiently flexible for analyses at the individual level the cadi and crdi discount functions are the analogs of the well known cara and crra utility functions for decision under risk

a comparison of the discounted utility model and hyperbolic discounting models in the case of social and private intertemporal preferences for health whilst there is substantial evidence that hyperbolic discounting models describe intertemporal preferences for monetary outcomes better than the discounted utility du model there is only very limited evidence in the context of health outcomes this study elicits private and social intertemporal preferences for non fatal changes in health specific functional forms of the du model and three hyperbolic models are fitted the results show that the stationarity axiom is violated and that the hyperbolic models fit the data better than the du model intertemporal preferences for private and social decisions are found to be very similar

competitive equilibrium with indivisibilities abstract this paper studies an exchange economy with a finite number of agents in which each agents is initially endowed with a finite number of personalized indivisible commodities we observe that the equivalence theorem of the core and the competitive equilibrium may not hold for this economy when the coalitional form game is generated in the standard manner we provide an alternative definition of the coalitional form game to resolve this problem so that the balancedness of the new defined game provides a useful necessary and sufficient condition for the existence of competitive equilibrium for the original economy journal of economic literature classification numbers c71 d41 d51

a new product growth for model consumer durables this article originally appeared in management science january 1969 volume 15 number 5 pp 215 227 published by the institute of management sciences a growth model for the timing of initial purchase of new products is developed and tested empirically against data for eleven consumer durables the basic assumption of the model is that the timing of a consumer s initial purchase is related to the number of previous buyers a behavioral rationale for the model is offered in terms of innovative and imitative behavior the model yields good predictions of the sales peak and the timing of the peak when applied to historical data a long range forecast is developed for the sales of color television sets

anomalies in intertemporal choice evidence and an interpretation research on decision making under uncertainly has been strongly influenced by the documentation of numerous expected utility eu anomalies behaviors that violate the expected utility axioms the relative lack of progress on the closely related topic of intertemporal choice is partly due to the absence of an analogous set of discounted utility du anomalies we enumerate a set of du anomalies analogous to the eu anomalies and propose a model that accounts for the anomalies as well as other intertemporal choice phenomena incompatible with du we discuss implications for savings behavior estimation of discount rates and choice framing effects

games played through agents in the laboratory a test of prat rustichini s model abstract from the regulation of sports to lawmaking in parliament in many situations one group of people agents make decisions that affect the payoffs of others principals who may offer action contingent transfers in order to sway the agents decisions prat and rustichini 2003 characterize pure strategy equilibria of such games played through agents specifically they predict the equilibrium outcome in pure strategies to be efficient we test the theory in a series of experimental treatments with human principals and computerized agents the theory predicts remarkably well which actions and outcomes are implemented but subjects transfer offers deviate systematically from equilibrium we show how quantal response equilibrium accounts for the deviations and test its predictions out of sample our results show that quantal response equilibrium is particularly well suited for explaining behavior in such games

equity axioms for public risks from the perspective of a two person society we explain and analyze six axioms for equity among individuals who are exposed to the possibility of death from a public hazard the axioms are concerned with how a given total risk expected fatalities is distributed over the four possible life death consequences for the two people maximal subsets of mutually compatible equity axioms are identified first for a monotonic ordinal utility function and then for a more restrictive von neumann morgenstern utility function

the average shadow price for milps with integral resource availability and its relationship to the marginal unit shadow price abstract the economic significance of the average shadow price for integer and mixed integer linear programming milp problems has been established by researchers kim and cho eur j operat res 37 1988 328 crema eur j operat res 85 1995 625 in this paper we introduce a valid shadow price aspira for integer programs where the right hand side resource availability can only be varied in discrete steps we also introduce the concept of marginal unit shadow price musp we show that for integer programs a sufficient condition for the marginal unit shadow price to equal the average shadow price is that the law of diminishing returns should hold the polyhedral structures that will guarantee this equivalence have been explored identification of the problem classes for which the equivalence holds complements the existing procedure for determining shadow price for such integer programs the concepts of aspira and musp introduced in this paper can play a vital role in resource acquisition plans and in defining efficient market clearing prices in the presence of indivisibilities

weighted discounting on group diversity time inconsistency and consequences for investment abstract this paper presents the class of weighted discount functions which contains the discount functions commonly used in economics and finance weighted discount functions may describe the discounting behavior of groups uncertainty about what discount rate to use present biased time preferences and all of these simultaneously as an application we study investment behavior under weighted discounting and come up with the following general result greater group diversity greater parameter uncertainty and more present biased time preferences lead to delayed investment or equivalently more risk taking

reconsidering carbon permits auction mechanism an efficient dynamic model one of major concerns for china and developing countries is the new international trade rule concerning carbon emissions which one needs to know its suitable mechanism and the possible implication on china s carbon trading market precisely in an emission and trade scheme an important question is whether the auction outcome is efficient since this is closely related with the economic costs of emissions reduction due to the unique features of carbon permits existing auction mechanisms do not seem to be suitable for their distribution inspired by the t tonnement process this paper proposes a new auction mechanism for them for both practical application and theoretical extension the discrete and continuous situations are examined respectively the result shows that the proposed auction converges to pareto optimal equilibria and that without ties the equilibrium is unique for bidders the straightforward bidding strategy is the most preferred one in the sense that the strategy makes them avoid the risk of loss intuitively the auctioneer s utility is increasing in the number of bidders while bidders pay off is increasing in permits to a certain extent the proposed auction mechanism resolves the confliction between efficiency and revenue in the multi item auction theory while it increases people s understanding for carbon emission auction mechanism design

an efficient dynamic auction for heterogeneous commodities this paper proposes a new dynamic design for auctioning multiple heterogeneous commodities generalizing earlier work that treated identical objects an auctioneer wishes to allocate one or more units of each of k heterogeneous commodities to n bidders the auctioneer announces a vector of current prices bidders report back quantities demanded at these prices and the auctioneer adjusts the prices units are credited to bidders at the current prices as their opponents demands decline and the process continues until every commodity market clears bidders rather than being required to behave as price takers are permitted to strategically exercise their market power nevertheless with pure private values the proposed auction yields walrasian equilibrium prices an efficient outcome results as from a vickrey clarke groves mechanism but bidders are only required to evaluate their demands along a one dimensional path of prices rather than reporting their utilities over the entire k dimensional consumption set the auction is also more transparent and potentially simpler for bidders to understand and has the advantage of assuring the privacy of the upper portions of bidders demands theoretically the new auction provides a new foundation for convergence to walrasian equilibrium in an exchange economy practically it provides an efficient method for simultaneously auctioning two or more related types of securities for example three month and six month treasury bills it is also potentially useful for auctioning multiple types of communications spectrum for example licenses for paired and unpaired spectrum

vertically differentiated simultaneous vickrey auctions theory and experimental evidence we study settings where a number of sellers simultaneously offer vertically differentiated vickrey auctions for imperfect substitute goods to unit demand buyers vertical differentiation can arise from differences in item quality item value certainty seller reliability or a combination of these factors we characterize the form of the bidding equilibria and derive expressions for the corresponding allocative efficiency and expected seller revenue when bidders are restricted to submit at most one bid our theory predicts the existence of a unique bayes nash equilibrium that resembles a form of probabilistic mating of likes allowing unit demand bidders to place an arbitrary number of bids induces complex strategy profiles where bidders place positive bids in all available auctions higher bidder types tend to follow more targeted strategies focusing their serious bids on fewer and generally higher quality auctions the nature of the bidding equilibria introduces allocative inefficiencies that arise from the lack of coordination in auction selection among bidders we test our theoretical propositions in a controlled laboratory experiment while also utilizing a domain specific risk score to help assess how the bidders risk type affects their bidding behavior in support of our theory we find evidence of a probabilistic assortative matching between bidder and auction types we also find that low risk type bidders tend to crowd on the highest auction and will pay a premium for the certainty it offers whereas high risk type bidders fail to appropriately adjust for risk associated with the lowest auction leading to overbidding these lead to an interesting focal anomaly whereby bids are concentrated on the highest and lowest auctions bypassing intermediate auctions

when efficient is insufficient fairness in decisions affecting a group many key decisions have significant consequences for a group of people rather than a single individual in some cases traditional group decision making techniques such as negotiation voting or compromise can be employed by the group members themselves to determine a satisfactory course of action in other instances however the intervention of a central decision maker may be necessary intervening on behalf of a group raises additional concerns for the decision maker one of which is fairness this paper builds upon envy based fairness concepts from the fair allocation literature and theories of ex ante and ex post equitable distributions from the social risk literature to develop a model for choice among limited options under uncertainty when preferences are heterogeneous the model is therefore appropriate when other existing models are not an example demonstrates an application of the model for choice under uncertainty and contrasts the approach and decision recommendation with that of existing models by quantifying the degree of envy rather than treating it dichotomously the approach captures the balance between fairness and efficiency some envy may be tolerated if it brings greater overall utility and or if some envy already exists in the status quo option lastly implementation issues and the impact of differing preferences and attitudes toward risk on fairness and efficiency considerations are explored

on the neoclassical growth model with non constant discounting we study the neoclassical growth model with non constant discounting we do not assume specific functional forms for discounting and demonstrate that the competitive economy always performs better than the planning economy

convex time budgets and individual discount rates in the long run the purpose of this study is to use experimental data to estimate individual discount rates and test for hyperbolic discounting over a long time horizon to do this we employ the convex time budget experimental approach with cash payments over a 20 year time horizon to date there are few experimental studies that explore discount rates beyond a 1 year time horizon previous experimental studies that focus on short time horizons find high discount rates which may not be applicable to decisions that affect outcomes in the distant future our findings are quite similar to the average rate of 4 9 found by grijalva et al environ resour econ 59 39 63 2014 who similarly use a 20 year time horizon but use the multiple price list elicitation method along with payment via government savings bonds we find annual discounts rates in the range of 1 9 5 5 depending on the specific model used we also find evidence for declining discount rates and that this hyperbolic pattern of behavior is related to the confidence subjects have in receiving distant future payments

a mire of discount rates delaying conservation payment schedules in a choice experiment studies on the public s implicit discount rate in the willingness to pay for environmental amenities have mostly employed contingent valuation surveys we investigate respondents time preferences using choice experiments with four payment schedules in a split sample design in the context of mire conservation we first examine preference and taste heterogeneity among respondents finding them to a large extent independent of payment schedules next we use an endogenous approach to jointly estimate the implicit discount rates and preferences using choice experiments data we explore exponential and hyperbolic discounting model specifications we find insensitivity to the length of the payment period and support for hyperbolic discounting furthermore we provide policy relevant valuation results concerning mire conservation

decision making over time and under uncertainty a common approach this paper considers a number of parallels between risky and intertemporal choice we begin by demonstrating a one to one correspondence between the behavioral violations of the respective normative theories for the two domains i e expected utility and discounted utility models we argue that such violations or preference reversals are broadly consistent with three propositions about the weight that an attribute receives in both types of multiattribute choice specifically it appears that 1 if we add a constant to all values of an attribute then that attribute becomes less important 2 if we proportionately increase all values of an attribute or if we change the sign of an attribute from positive to negative then that attribute becomes more important the generality of these propositions as well as the constraints they would impose on separable representations of multiattribute preferences is discussed

empirical and public choice evidence for hyperbolic social discount rates and the implications for intergenerational discounting the derivation of the correct discount rate for intergenerational projects in cost benefit analysis is particularly contentious public choice has resulted in lower discretionary exponential discount rates for many intergenerational projects in britain and the usa this is shown to be strong indirect evidence that the true social discount rate may be a hyperbolic rather than an exponential function there is also empirical evidence for this hypothesis the hyperbolic nature of discounting is also a standard finding in the behavioural sciences for intergenerational time frames hyperbolic discount rates should be employed together with exponential discount rates in cost benefit sensitivity analyses

value functions for infinite period planning cost benefit and risk analysis studies that model tradeoffs between the present and the distant future by means of present value discounting have been criticized for according the future and thus future generations far too little importance this paper presents an alternative means of modeling tradeoffs between different periods that accords the future far more importance than present value discounting and that is no more difficult to apply the paper also presents a means of modeling the preference issue of concern for equity or stability between different periods

hyperbolic discounting of the far distant future abstract we prove an analogue of weitzman s 1998 famous result that an exponential discounter who is uncertain of the appropriate exponential discount rate should discount the far distant future using the lowest i e most patient of the possible discount rates our analogous result applies to a hyperbolic discounter who is uncertain about the appropriate hyperbolic discount rate in this case the far distant future should be discounted using the probability weighted harmonic mean of the possible hyperbolic discount rates

the package assignment model we study assignment problems where individuals trade packages consisting of several rather than single objects although buyers reservations values are non additive efficient assignments can be formulated as a linear programming problem in which the pricing functions expressing duality may be non linear in the objects constituting the packages the interconnections among the linear programming formulation walrasian equilibrium and the core are established in the single seller auction version a necessary and sufficient condition is given for the vickrey payoff point to be implementable by a pricing equilibrium journal of economic literature classification numbers c62 d44 d51

focusing the financial flow of supply chains an empirical investigation of financial supply chain management the objective of this paper is to establish a theoretical foundation for financial supply chain management fscm in order to strengthen managerial decisions concerning financial flows in supply chains although such decisions are made frequently and partial aspects of fscm are already understood in business practice empirical knowledge about fscm is in its early stages the study provides fundamental information derived from eight case studies based on 40 interviews the analysis extends previous studies of the interface between operations management and finance by i contributing to a mid range theory of fscm by exploring two distinct but not exclusive fscm categories their antecedents and performance effects ii empirically deriving a testable framework for fscm iii relating fscm to established theories in the field of scm and iv basing the analysis on transaction cost economics managerial insights reveal that weak working capital causes firms to focus on fscm more specifically the study identifies two fscm categories pre shipment fscm before invoice release and post shipment fscm after invoice release managers can improve upstream supply chain working capital with pre shipment fscm whereas post shipment fscm strengthens the buying firm s working capital position based on transaction cost economics we analyze how these improvements stem from risk reductions which are more effective if firms are integrated internally and externally

fairness and social risk i unaggregated analyses this paper is the second of a two paper study of fairness issues for decisions that affect the benefits received and the risks encountered by a population the study examines fairness for individuals and for homogeneous groups within the population it considers fairness both for population benefit risk profiles and for probability distributions over profiles our study bases fairness on notions of envy among individuals and groups the first paper focused on fairness in profiles and profile distributions when benefits and risks are not aggregated the present paper uses individual preferences to assess fairness when benefits and risks are aggregated within groups or over the population it concentrates on intergroup envy measures and fairness indices that account for ways that aggregated benefits and risks might be allocated to members of groups or to groups within the population

intertemporal valuation of river restoration willingness to pay for an environmental improvement is a function of how long it takes to deliver the improvement to measure the effect of time on benefits i utilize a discrete choice experiment that includes an attribute for delay until the improvement occurs and simultaneously estimate discount rates and valuation parameters i estimate the present value of immediate and delayed minnesota river basin improvements using discount rates directly estimated from the econometric model compared to an immediate river basin cleanup minnesota residents lose almost half of the benefits when cleanup is delayed by 5 years

a power law type of time preference on intertemporal choices abstract discount utility based on utility theory is used to study human decision behaviors under the consideration of time preference it assumes that by means of the axiomatic system of rationality it is possible to quantify human beings utilities by some explicable models for intertemporal decision making recent studies have been based on two basic models the exponential and the hyperbolic discount models these two types of model have been proved to be either too fast for discounting or too restricted for fitting human beings discounting behaviors in this study a power law discount model is proposed axiomatic approach is used to ascertain the existence of the power law discount utility and empirical investigations are implemented to verify the effectiveness of the proposed model

supply chain finance optimal introduction and adoption decisions supply chain finance scf can improve supply chain performance by facilitating longer payment terms for buyers and better access to financing for suppliers in spite of these clear benefits there is empirical evidence for some hesitation and resistance to scf adoption manifesting in an often substantial time lag between a buyer s introduction of scf and its adoption by all targeted suppliers observed adoption processes often resemble the s shaped bass curve suggesting that successful early adoptions support adoption decisions by other suppliers based on these observations we consider supplier scf adoption decisions within a diffusion model to obtain insights regarding a buyer s optimal scf introduction decisions in terms of timing and payment terms we find that initial payment terms and procurement volume strongly affect the optimal timing of scf introduction and optimal payment term extensions the degree to which the buyer can influence suppliers in their adoption decisions affects the optimal introduction timing but not optimal payment terms interestingly our results suggest that in spite of the clear benefits many buyers might be well advised to postpone their scf implementations

the importance of ordering in sequential auctions to date the largest part of literature on multi unit auctions has assumed that there arek homogeneous objects being auctioned where each bidder wishes to win exactly one or all ofk units these modeling assumptions have made the examination of ordering in sequential auctions inconsequential the aim of this paper is to introduce and highlight the critical influence that ordering can have on the efficiency of an auction we study a buyer who outsources via sequential 2nd price auctions two heterogeneous jobs and faces a diverse set of suppliers with capacity constraints

auction protocols for decentralized scheduling decentralized scheduling is the problem of allocating resources to alternative possible uses over time where competing uses are represented by autonomous agents market mechanisms use prices derived through distributing bidding protocols to determine schedules we investigate the existence of equilibrium prices for some general classes of scheduling problems the quality of equilibrium solutions and the behavior of an ascending auction mechanism and bidding protocol to remedy the potential nonexistence of price equilibria due to complementarities in preference we introduce additional markets in combinations of basic goods finally we consider direct revelation mechanisms and compare to the market based approach journal of economic literature classification numbers c62 c70 d44

technical note measuring equity in public risk an equitable distribution of risk is often an important criterion in the evaluation of technological and environmental risks in this paper we define the concept of equity precisely and develop measures for ex post and ex ante equity we then show how these measures combined with information on the number of possible fatalities can be used to rank alternatives that involve risks to human life

an efficient ascending bid auction for multiple objects when bidders exhibit multi unit demands standard auction methods generally yield inefficient outcomes this article proposes a new ascending bid auction for homogeneous goods such as treasury bills or telecommunications spectrum the auctioneer announces a price and bidders respond with quantities items are awarded at the current price whenever they are clinched and the price is incremented until the market clears with private values this dynamic auction yields the same outcome as the sealed bid vickrey auction but has advantages of simplicity and privacy preservation with interdependent values this auction may retain efficiency whereas the vickrey auction suffers from a generalized winner s curse

dispersive equity and social risk dispersive equity is concerned with the impact of life threatening risks from alternative policy decisions on homogeneous groups in a population it is not addressed to the disutility of various numbers of fatalities that might occur but rather to how fatalities are distributed over the groups although dispersive equity has long been recognized as an important component of some policy decisions it has received little formal treatment within the matrix of salient factors for such decisions our purpose is to advance its formal development this is done within a formulation based on probability distributions over potential fatality sets the formulation gives rise to four distinct but not independent equity concepts individual risk equity group risk equity dispersive equity and social outcome equity each of these is analyzed but special attention is given to dispersive equity the paper also comments on relationships between total equity and its four components and between total equity and the dis

a microcredit contract model with a black scholes model under default risk microfinance has emerged as a new promise for alleviating poverty and improving the limited access to financial services by offering small loans with no pledged collateral requirement to the poor due to the unique features of microfinance the credit relationship between the lender and the borrower is considered to be the foundation of the business based on the concept of supply chain microfinance this paper develops scenario based stochastic microcredit contract models for a group case in order to obtain a minimum interest rate a black scholes debt model estimates volatility directly from market observable returns on a borrower s equity next incorporating the minimum interest rate the stochastic microcredit models are developed to calculate a proper interest rate while maintaining the financial sustainability of a corporation the stochastic microcredit models also include financial statement analysis through financial ratios to reflect the microfinance business environment through the comparison of the effect of cash flow bullwhip this study illustrates that the proposed model has the potential to decrease the bullwhip effect by determining a proper interest rate in microcredit the proposed models could be used by microfinance institutions as an effective credit risk tool

discounting behavior a reconsideration we re evaluate the theory experimental design and econometrics behind claims that individuals exhibit non constant discounting behavior theory points to the importance of controlling for the non linearity of the utility function of individuals since the discount rate is defined over time dated utility flows and not flows of money it also points to a menagerie of functional forms to characterize different types of non constant discounting behavior the implied experimental design calls for individuals to undertake several tasks to allow us to identify these models and to several treatments such as multiple horizons and the effect of allowing for a front end delay on earlier payments the implied econometrics calls for structural estimation of the theoretical models allowing for joint estimation of utility functions and discounting functions using data collected from a representative sample of 413 adult danes in 2009 we draw striking conclusions assuming an exponential discounting model we estimate discount rates to be 5 6 on average this is significantly lower than all previous estimates using controlled experiments we also find no evidence to support quasi hyperbolic discounting or fixed cost discounting and only modest evidence to support other specifications of non constant discounting furthermore the evidence for non constant discounting while statistically significant is not economically significant in terms of the size of the estimated discount rates we undertake extensive robustness checks on these findings including a detailed review of the previous comparable literature

job matching and coalition formation with utility or disutility of co workers abstract this paper studies the job matching market in kelso and crawford 1982 econometrica50 1483 1504 with one exception that co workers may generate utility or disutility in the workplace we provide a simple idea to show how a great number of sufficient conditions for a nonempty core in the literature can be extended to this labor market a generalized competitive equilibrium with a tax subsidy system is also discussed journal of economic literature classification number d71

optimal pricing strategy for new products robinson and lakhani 1975 initiated a long research stream in marketing when they used the bass model 1969 to develop optimal pricing path for a new product a careful analysis of the extant literature reveals that the research predominantly suggests that the optimal price path should be largely based on the sales growth pattern however in the real world we rarely find new products that have such pricing pattern we observe either a monotonically declining pricing pattern or an increase decrease pricing pattern that does not seem close to the sales path in this paper we use a variation of the generalized bass model called gbm developed by bass et al 1994 that yields optimal pricing policies that are consistent with empirical data

the existence and computation of competitive equilibria in markets with an indivisible commodity abstract this paper considers an exchange economy called a generalized assignment market in which sellers and buyers trade one indivisible commodity possibly with product differentiation for a perfectly divisible commodity the existence of a competitive equilibrium in this economy is proved using kakutani s fixed point theorem this existence theorem is applied to a production economy in which sellers are formulated as producers with convex cost functions two examples of housing markets are provided and their competitive equilibria are numerically calculated

an anticipative hyperbolic discount utility on intertemporal decision making discount utility is facilitated to scrutinize human decision behaviors for different points in time under the consideration of time preference recent studies are extended from two basic models which are the exponential and the hyperbolic discount models and the more popular hyperbolic discount model is well recognized for resolving the effects of preference reversal and is less steeply discounting than the exponential discount model however to enhance the capability of explaining intertemporal decision making behavior an anticipative hyperbolic discount utility model was proposed which revised the conventional hyperbolic discount utility by introducing the anticipative parameters under the consideration of anticipation of future gains or losses an empirical investigation was employed to validate the effectiveness of the proposed anticipative hyperbolic discounting utility model which was able to empirically go beyond the traditional hyperbolic discounting utility model also the proposed anticipative hyperbolic model is capable of dealing with the anomalies of preference reverse and framing effects

the communication requirements of social choice rules and supporting budget sets the paper examines the communication requirements of social choice rules when the sincere agents privately know their preferences it shows that for a large class of choice rules any minimally informative way to verify that a given alternative is in the choice rule is by verifying a budget equilibrium i e that the alternative is optimal to each agent within a budget set given to him therefore any communication mechanism realizing the choice rule must find a supporting budget equilibrium we characterize the class of choice rules that have this property furthermore for any rule from the class we characterize the minimally informative messages budget equilibria verifying it this characterization is used to identify the amount of communication needed to realize a choice rule measured with the number of transmitted bits or real variables applications include efficiency in convex economies exact or approximate surplus maximization in combinatorial auctions the core in indivisible good economies and stable many to one matchings

stability and auctions in labor markets with job security fu et al 2016 introduced a stability concept for labor markets with job security we show that their proposed outcomes form nash equilibria of an auction where firms compete for workers this parallels literature on stable outcomes and similar auctions and yields new price of anarchy bounds

modeling of financial supply chain the research work on supply chain management has primarily focused on the study of materials flow and very little work has been done on the study of upstream flow of money in this paper we study the flow of money in a supply chain from the viewpoint of a supply chain partner who receives money from the downstream partners and makes payments to the upstream partners the objective is to schedule all payments within the constraints of the receipt of the money a penalty is to be paid if payments are not made within the specified time any unused money in a given period can be invested to earn an interest the problem is computationally complex and non intuitive because of its dynamic nature the incoming and outgoing monetary flows never stop and are sometimes unpredictable for tractability purposes we first develop an integer programming model to represent the static problem where monetary in flows and out flows are known before hand we demonstrate that even the static problem is np complete first we develop a heuristic to solve this static problem next the insights derived from the static problem analysis are used to develop two heuristics to solve the various level of dynamism of the problem the performances of all these heuristics are measured and presented

habits and the anomalies in intertemporal choice this paper analyzes a model of discounted utility under habit formation habit formation means that utility in each period is determined by the difference between the received outcome and the customary outcome at that point in time preferences are rational in the sense that the decision maker correctly anticipates the habit formation process and behaves in a dynamically consistent manner i e plans are truly carried out the purpose is to demonstrate that this generalization of the discounted utility model accounts jointly and in a meaningful way for the most striking anomalies with respect to classical discounted utility theory the common difference effect is explained first this effect also called decreasing impatience effect has usually been viewed as evidence against exponential discounting then the frequently observed preference for increasing sequences of outcomes is examined such preference under the traditional discounted utility model would be regarded as a paradoxical case of negative discounting a discussion of the descriptive prescriptive and normative values of the model is included

coordination mechanisms in decentralized serial inventory systems with batch ordering this paper studies a periodic review serial supply chain in which materials are ordered and shipped according to r nq policies three information scenarios are considered depending on the level of information available echelon local and quasilocal in the echelon scenario each stage can access the inventory and cost information within its echelon comprising the stage itself and all downstream stages in the local scenario each stage only accesses its own local information finally in the quasilocal scenario each stage knows its local information plus the actual customer demands we propose coordination schemes that regulate the stages to achieve the supply chain s optimal cost under each information setting all these coordination schemes fit comfortably within an emerging practice called supply chain finance which includes the organization and technology needed to implement them

participation costs and efficient auctions abstract suppose that risk neutral agents have independently and perhaps asymmetrically distributed private valuations for an indivisible object a mechanism assigns the object but it is costly to send messages to the coordinator in these circumstances the second price auction has an equilibrium that is classicallyex anteefficient given general opportunities to invest in information about or enhancements of own valuations in contrast the first price sealed bid auction may have no efficient equilibrium even if buyers are symmetric other properties of the first price auction are proved a semirevelation principle is established for mechanisms with participation costs journal of economic literatureclassification numbers d44 d82

competitive equilibrium in an exchange economy with indivisibilities abstract we analyze an exchange economy in which i all commodities except money are indivisible ii agents preferences can be described by a reservation value for each bundle of indivisible objects and iii all agents are price takers we obtain a necessary and sufficient condition under which market clearing prices exist implications for market mechanisms are discussed journal of economic literatureclassification numbers d51 c78

understanding preferences demand types and the existence of equilibrium with indivisibilities we propose new techniques for understanding agents valuations our classification into demand types incorporates existing definitions substitutes complements strong substitutes etc and permits new ones our unimodularity theorem generalises previous results about when competitive equilibrium exists for any set of agents whose valuations are all of a demand type for indivisible goods contrary to popular belief equilibrium is guaranteed for more classes of purely complements than of purely substitutes preferences our intersection count theorem checks equilibrium existence for combinations of agents with specific valuations by counting the intersection points of geometric objects applications include matching and coalition formation and the product mix auction introduced by the bank of england in response to the financial crisis

discounting by intervals a generalized model of intertemporal choice according to most models of intertemporal choice an agent s discount rate is a function of how far the outcomes are removed from the present and nothing else this view has been challenged by recent studies which show that discount rates tend to be higher the closer the outcomes are to one another subadditive discounting and that this can give rise to intransitive intertemporal choice we develop and test a generalized model of intertemporal choice the discounting by intervals dbi model according to which the discount rate is a function of both how far outcomes are removed from the present and how far the outcomes are removed from one another the model addresses past challenges to other models most of which it includes as special cases as well as the new challenges presented in this paper our studies show that when the interval between outcomes is very short discount rate tends to increase with interval length superadditive discounting in the discussion we place our model and evidence in a broader theoretical context

risk sharing and group decision making in a decision making problem where a group will receive an uncertain payoff which must be divided among the members of the group the ultimate payoff of interest is the vector of individual payoffs received by the members of the group in this paper preferences are quantified in terms of cardinal utility functions for such vectors of payoffs these utility functions can represent preferences concerning equitable and inequitable vectors of payoffs as well as attitudes toward risk the individual utility functions are aggregated to form a group utility function for the vector of payoffs and this latter function is in turn used to generate a group utility function for the overall group payoff and a sharing rule for dividing the group payoff into individual payoffs the resulting group decisions are pareto optimal in utility space properties of the sharing rule and the group utility function are investigated for additive and multilinear group utility functions

decision analysis models for social attitudes toward inequity social preferences for equity in the distribution of net benefits are not represented in a cost benefit study by the sum of the individuals net present values this paper presents two different decision analysts models for representing such an equity issue for each model conditions on the tradeoffs between different individuals are shown to imply that preferences can be represented by a special type of group value function procedures are presented by which such a group value function can be determined and used as part of a public policy evaluation

a note on probability distributions with increasing generalized failure rates distributions with an increasing generalized failure rate igfr have useful applications in pricing and supply chain contracting problems we provide alternative characterizations of the igfr property that lead to simplify verifying whether the igfr condition holds we also relate the limit of the generalized failure rate and the moments of a distribution

multi item auctions a collection of items is to be distributed among several bidders and each bidder is to receive at most one item assuming that the bidders place some monetary value on each of the items it has been shown that there is a unique vector of equilibrium prices that is optimal in a suitable sense for the bidders in this paper we describe two dynamic auction mechanisms one achieves this equilibrium and the other approximates it to any desired degree of accuracy

models of quality adjusted life years when health varies over time survey and analysis quality adjusted life year qaly models are widely used for economic evaluation in the health care sector in the first part of the paper we establish an overview of qaly models where health varies over time and provide a theo retical analysis of model identification and parameter estimation from time trade off tto and standard gamble sg scores we investigate deterministic and probabilistic models and consider five different families of discounting functions in all the second part of the paper discusses four issues recurrently debated in the literature this discussion includes questioning the sg method as the gold standard for estimation of the health state index re examining the role of the constant proportional trade off condition revisiting the problem of double dis counting of qalys and suggesting that it is not a matter of choosing between tto and sg procedures as the combination of these two can be used to disen tangle risk aversion from discounting we find that caution must be taken when drawing conclusions from models with chronic health states to situations where health varies over time one notable difference is that in the former case risk aversion may be indistinguishable from discounting models of quality adjusted life years qalys are widely used as health related quality of life measures for economic evaluation in the health care sector in its simplest form the qaly approach assumes that the utility of a profile of health states over time may be estimated by adding the values of the constituent health states in the health profile in more sophisticated models health events occurring in the future may be discounted or risk adjusted

bundling decisions by a multiproduct monopolist with incomplete information this paper analyzes bundling decisions of a rnultiproduct monopolist facing uncertain demand the monopolist sells his products using an auction mechanism and the market is analyzed as a game with incomplete information in which the buyers as well as the seller are strategic agents with a small number of buyers a profit maximizing seller will bundle all his output this makes buyers uniformly worse off compared to the case where the same monopolist does not bundle in the sense that any buyer is worse off regardless of his demand for the monopolist s outputs with a larger number of buyers the seller will have a tendency to unbundle his output and high demand buyers are worse off than they would be if the monopolist bundled his output low demand buyers on the other hand are always better off when the monopolist unbundles his output regardless of the number of competing buyers despite the fact that high demand buyers are the typical purchasers of the monopolist s output the net effect of increasing the number of buyers is greater market efficiency since bundling creates market inefficiencies both ex post and ex ante

package auctions and exchanges we report recent advances concerning the package allocation problem in which traders seek to buy or sell combinations of goods the problems are most difficult when some goods are not substitutes in that case competitive equilibrium typically fail to exist but the core is non empty and comprises the competitive solutions also in that case the vickrey auction fails to select core allocations and yield revenues that are less than competitive the ausubel milgrom auction generally selects core allocations and when goods are substitutes prescribes the vickrey allocation we also evaluate the problems and promise of mechanisms for the package exchange problem

assessment of preferences by conditions on pricing out amounts a value function for consequences described by a monetary attribute and one or more other attributes can be determined by assessing pricing out amounts between the monetary attribute and each of the other attributes this willingness to pay procedure is restricted to decision problems in which the pricing out amounts are independent of the decision maker s monetary position this paper extends the procedure to decision problems in which the pricing out amounts do depend on monetary position it then presents new procedures by which conditions on this dependence can be used in place of multiattribute risk conditions to determine a utility function

intertemporal tradeoffs for gains and losses an experimental measurement of discounted utility this article provides a parameter free measurement of utility in intertemporal choice and presents new and more robust evidence on the discounting of money outcomes intertemporal utility was concave for gains and convex for losses consistent with a hypothesis put forward by loewenstein and prelec 1992 discount rates declined over time but less so than previously observed under the assumption of linear utility for approximately 40 of our subjects constant discounting provided the best fit the remaining 60 were most consistent with harvey s 1986 power discounting our data provide little support for the popular quasi hyperbolic model which is widely used in economics today we observed an asymmetry in the discounting of gains and losses that unlike earlier findings cannot be explained by a framing effect

interrelating operational and financial performance measurements in inventory control financial supply chain management and working capital management are increasingly receiving attention as important avenues to increase profitability in supply chains by actively managing payment terms and working capital requirements managers can influence financial performance and achieve significant cost savings however measures to improve financial performance implicitly restrict and influence operational performance in our research we elaborate on the benefits of equally considering both operational and financial aspects in decision making for the physical and financial supply chain we develop a mathematical model that determines the optimal purchasing order quantity under working capital restrictions and payment delays we analyze the trade offs between the most commonly used financial and operational measurements such as service level return on investment profit margin and inventory level our results demonstrate the significance of payment delays increases decreases in the upstream downstream payment delays favor the system s operations by decreasing operational costs moreover increases in the working capital employed in the system decrease the total operational cost increase the total financial cost and lower the return on working capital investment c 2009 elsevier b v all rights reserved

relative concave utility for risk and ambiguity this paper presents a general technique for comparing the concavity of different utility functions when probabilities need not be known it generalizes a yaari s comparisons of risk aversion by not requiring identical beliefs b kreps and porteus information timing preference by not requiring known probabilities c klibanoff marinacci and mukerji s smooth ambiguity aversion by not using subjective probabilities which are not directly observable and by not committing to violations of dynamic decision principles d comparative smooth ambiguity aversion by not requiring identical second order subjective probabilities our technique completely isolates the empirical meaning of utility it thus sheds new light on the descriptive appropriateness of utility to model risk and ambiguity attitudes

auctions with endogenous valuations the persistence of monopoly revisited it is shown that the standard arguments for a monopoly to persist break down when many units of capacity become available sequentially the reason is that deterring entry at one st age affects the cost of doing so in later stages this force can be so powerful that entry is deterred only at the final stage the persistence of monopoly or its erosion over time depends on the timi ng of arrival of capacity the size of early versus subsequent capacity availability the length of the capacity acquisition stage relative to the life of the industry and the discount factor copyright 1993 by american economic association

equilibria and indivisibilities gross substitutes and complements this paper examines an exchange economy with heterogeneous indivisible objects that can be substitutable or complementary we show that a competitive equilibrium exists in such economies provided that all the objects can be partitioned into two groups and from the viewpoint of each agent objects in the same group are substitutes and objects across the two groups are complements this condition generalizes the well known kelso crawford gross substitutes condition and is called gross substitutes and complements we also provide practical and typical examples from which substitutes and complements are both jointly observed

an empirical study on intertemporal decision making under risk this study compares time preference in the cases of certainty and risk we analyze both matching and choice behavior we find that violations of the stationarity axiom are restricted to matching behavior both for certainty and risk we also compare the discounting of certain and risky outcomes as well as the discounting of gains and losses in matching tasks certain outcomes are discounted more than risky ones we could not confirm these results in a choice task gains and losses are not found to be discounted at different rates

pricing and allocation for quality differentiated online services we explore the problem of pricing and allocation of unique one time digital products in the form of data streams we look at the short term problem where the firm has a capacitated shared resource and multiple products or service levels we formulate the allocatively efficient generalized vickrey auction gva for our setting and point out the computational challenges in determining the individual discriminatory transfer payments we propose an alternative uniform price computationally efficient revenue maximizing knapsack formulation called the multiple vickrey auction mva while not incentive compatible the mva mechanism achieves bounded posterior regret and can be solved in real time it has the added benefit of realizing imputed commodity prices for the various services a feature lacking in the discriminatory gva approach for service providers that are concerned about the incentive compatibility but want imputed service prices we suggest a maximal mva mmva uniform pricing scheme that trades off revenue maximization for allocative efficiency for sake of completeness we discuss the properties of a first price pay your bid scheme while np hard and not incentive compatible this formulation has the perceived benefit of cognitive simplicity on the parts of sellers and bidders

uncertain lifetime and intertemporal choice risk aversion as a rationale for time discounting this article makes explicit the links between preferences over lotteries on length of life and intertemporal choice it shows that the approach used by traditional life cycle models to account for uncertain survival corresponds to a strong assumption of risk neutrality with respect to length of life relaxing such an assumption leads us to develop a more general formulation of lifetime utility in which time discounting is directly related to preferences over length of life exponential and hyperbolic discounting are found to result in a first approximation from constant and hyperbolic risk aversion with respect to length of life