effect of information feedback on bidder behavior in continuous combinatorial auctions combinatorial auctions in which bidders can bid on combinations of goods can increase the economic efficiency of a trade when goods have complementarities recent theoretical developments have lessened the computational complexity of these auctions but the issue of cognitive complexity remains an unexplored barrier for the online marketplace this study uses a data driven approach to explore how bidders react to the complexity in such auctions using three experimental feedback treatments using cluster analyses of the bids and the clicks generated by bidders we find three stable bidder strategies across the three treatments further these strategies are robust for separate experiments using a different setup we also benchmark the continuous auctions against an iterative form of combinatorial auction the combinatorial clock auction the enumeration of the bidding strategies across different types of feedback along with the analysis of their economic implications is offered to help practitioners design better combinatorial auction environments this paper was accepted by lorin hitt information systems

the value of corporate voting rights and control a cross country analysis this paper measures the value of corporate voting rights specifically of the control block of votes in a sample of 661 dual class firms in 18 countries in 1997 a consistent measure across countries is proposed the measure is adjusted for takeover probability block holding costs and dividend and liquidity differences between the share classes the value of controlblock votes varies widely across countries it is close to half of firm market value in south korea andclose to zero in finland the value of control block votes is interpretedas a lower bound for actual private benefits of the controlling shareholder the legal environment law enforcement investor protection takeover regulations andpower concentrating corporate charter provisions explain 68 of the cross country variation in the value of control block votes

a parametrization of the auction design space abstract we present an extensive breakdown of the auction design space that captures the essential similarities and differences of many auction mechanisms in a format more descriptive and useful than simple taxonomies this parametrization serves as an organizational framework in which to classify work within the field and uncovers parameter combinations corresponding to novel mechanisms the structured characterization of auction rules can be exploited for the modular design of configurable auction servers it also facilitates the communication of auction rules to software agents enabling the automation of flexible market based negotiation journal of economic literature classification numbers c70 d44

a multi unit tender award process the case of transantiago the transantiago public transit services were grouped into five trunk service units and 10 feeder units and were awarded to private operators through a simultaneous tender to avoid problems of ownership concentration limits were placed on the maximum number of units per operator this paper describes the issues involved in such simultaneous multi unit tenders where various actors bid for different business units to be awarded in a single tender process the general problem is formulated as a minimum cost network flow problem mcnfp tie breaking criteria are discussed and modeled the problem is then solved for the transantiago case there follows a discussion of the utility of handling this tender using the tool developed here

financial statement comparability and expected crash risk this study examines the impact of financial statement comparability on ex ante crash risk using the comparability measures of de franco et al 2011 we find that expected crash risk decreases with financial statement comparability and this negative relation is more pronounced in an environment where managers are more prone to withhold bad news we also provide evidence that comparability can mitigate the asymmetric market reaction to bad versus good news disclosures our results suggest that financial statement comparability disinclines managers from bad news hoarding which reduces investors perceptions of a firm s future crash risk

theory experiment and the federal communications commission spectrum auctions abstract the fcc uses the simultaneous multi round auction sma to assign spectrum licenses congress mandated that the sma be compared to an auction that allows combinatorial bids we review the theoretical and experimental evidence relevant to the sma procedures and their inherent defects results from experiments evaluating the sma in comparison to a combinatorial auction designed by charles river and associates show that several of the sma rules hinder efficiency and create a trade off between efficiency and auction length the combinatorial auction outperforms the sma when license values are superadditive but requires more time to complete and is not robust

a binary conflict ascending price bicap mechanism for the decentralized allocation of the right to use railroad tracks the questions posed for study are motivated by controversies over how sweden might change from a centralized system of railroad management to a decentralized system the central rail administration banverket will retain ownership and maintenance responsibility of the tracks but will sell access to the tracks to private firms the questions are about the mechanism that might accomplish this task parties to the controversy have claimed that the technical aspects of networks will as a matter of principle preclude the operation of any decentralized method this paper explores the properties of a mechanism developed as a challenge to that claim the mechanism is examined in the context of a testbed experimental environment that contains many potential problem causing elements in the tests performed the mechanism operated to efficiently allocate access to the network and it did so for behavioral reasons that are understandable in terms of theory the paper closes with suggestions for further study of environments that might present additional challenges to a mechanism

design for optimized multi lateral multi commodity markets abstract in this paper we propose a design for an economically efficient optimized centralized multi lateral periodic commodity market that addresses explicitly three issues i substantial transportation costs between sellers and buyers ii non homogeneous in quality and nature commodities iii complementary commodities that have to be traded simultaneously the model allows sellers to offer their commodities in lots and buyers to explicitly quantify the differences in quality of the goods produced by each individual seller the model does not presume that products must be shipped through a market hub we also propose a multi round auction that enables the implementation of the direct optimized market and approximates the behaviour of the ideal direct optimized mechanism the process allows buyers and sellers to modify their initial bids including the technological constraints the proposed market designs are particularly relevant for industries related to natural resources we present the models and algorithms required to implement the optimized market mechanisms describe the operations of the multi round auction and discuss applications and perspectives

divergence of cash flow and voting rights opacity and stock price crash risk international evidence this study investigates whether and how the deviation of cash flow rights ownership from voting rights control or simply the ownership control wedge influences the likelihood that extreme negative outliers occur in stock return distributions which we refer to as stock price crash risk we do so using a comprehensive panel data set of firms with a dual class share structure from 20 countries around the world for the period of 1995 2007 we predict and find that opaque firms with a large wedge are more crash prone than opaque firms with a small wedge in addition we predict and find that the positive relation between the wedge and crash risk is less pronounced for firms with more effective external monitoring and for firms with greater growth opportunities the results of this study are broadly consistent with jin and myers s theory that agency costs combined with opacity exacerbate stock price crash risk

market architectures and institutional testbedding an experiment with space station pricing policies by the year 2000 the national aeronautics and space administration nasa plans to launch and operate an earth orbiting space station for decades into the future the station is expected to play a dominant role in u s space research and in the commercialization of space if the expectations are correct then the station will be a complex of potentially valuable resources and services much sentiment exists within the government that the allocation of those resources should be based on some sort of market oriented policy a more business like approach this paper is part of a larger project that is intended to ascertain what that policy might be

exploring the vcg mechanism in combinatorial auctions the threshold revenue and the threshold price rule abstract we explore interesting potential extensions of the vickrey clarke groves vcg rule under the assumption of players with independent and private valuations and no budget constraints first we apply the vcg rule to a coalition of bidders in order to compute the second price of the coalition then we introduce and formulate the problem of determining that partition of players into coalitions which maximize the auctioneer s revenue in the case whereby such coalitions take part to a vcg auction each one as a single agent in particular we provide an integer linear formulation of this problem we also generalize this issue by allowing players to simultaneously belong to distinct coalitions in the case that players valuation functions are separable finally we propose some applications of these theoretical results for instance we exploit them to provide a class of new payment rules and to decide which bids should be defined as the highest losing ones in combinatorial auctions

tacit collusion in auctions and conditions for its facilitation and prevention equilibrium selection in laboratory experimental markets the paper studies bidder behavior in simultaneous continuous ascending price auctions we design and implement a collusion incubator environment based on a type of public symmetrically folded and item aligned preferences tacit collusion develops quickly and reliably within the environment once tacit collusion developed it proved remarkably robust to institutional changes that weakened it as an equilibrium of a game theoretic model the only successful remedy was a non public change in the preference of participants that destroyed the symmetrically folded and item aligned patterns of preferences creating head to head competition between two agents reminiscent of the concept of a maverick

smart market mechanisms from practice to theory abstract for the past decade experimental economists have been developing smart markets that allow for the processing and balancing of complex contingencies automatically by the market mechanism we develop a theoretical framework for representing smart markets and demonstrate a smart market mechanism that enforces all or none contingencies for a single good and satisfies four basic properties of fairness and efficiency it is then shown that such a market violates a fundamental invariant of traditional auction markets and so the law of a single price does not appear to apply to such a market we conclude by discussing the implications of this result to the general design of smart market mechanisms

the stability of logrolling an expectations approach this essay provides an explanation for the existence of stable logrolling arrangements the model presented assumes that issues are voted on one at a time that people are risk averse and that each person forecasts future issue decisions with a random variable whose mean is linear in the alternatives of the present issue we show that under this model the expectation that logrolling will take place stabilizes the logrolling process for this expectation to be stable it must be symmetric which means that revoting of issues must be possible since revoting is possible in institutions such as congress we conclude that an important set of real world voting bodies satisfies the conditions for stable logrolling

pricing combinatorial auctions abstract single item auctions have many desirable properties mechanisms exist to ensure optimality incentive compatibility and market clearing prices when multiple items are offered through individual auctions a bidder wanting a bundle of items faces an exposure problem if the bidder places a high value on a combination of goods but a low value on strict subsets of the desired collection to remedy this combinatorial auctions permit bids on bundles of goods however combinatorial auctions are hard to optimize and may not have incentive compatible mechanisms or market clearing individual item prices several papers give approaches to provide incentive compatibility and imputed individual prices we find the relationships between these approaches and analyze their advantages and disadvantages

opaque financial reports r2 and crash risk abstract we investigate the relation between the transparency of financial statements and the distribution of stock returns using earnings management as a measure of opacity we find that opacity is associated with higher r2s indicating less revelation of firm specific information moreover opaque firms are more prone to stock price crashes consistent with the prediction of the jin and myers 2006 r2 around the world new theory and new tests journal of financial economics 79 257 292 model however these relations seem to have dissipated since the passage of the sarbanes oxley act suggesting that earnings management has decreased or that firms can hide less information in the new regulatory environment

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

allocating uncertain and unresponsive resources an experimental approach we identify an important class of economic problems that arise naturally in several applications the allocation of multiple resources when there are uncertainties in demand or supply unresponsive supplies no inventories and fixed capacities and significant demand indivisibilities rigidities examples of such problems include scheduling job shops airports or supercomputers zero inventory planning and the allocation and pricing of nasa s planned space station using experimental methods we show that the two most common organizations used to deal with this problem markets and administrative procedures can perform at very low efficiencies 60 65 efficiency in a seemingly robust example thus there is a need to design new mechanisms that more efficiently allocate resources in these environments we develop and analyze two mechanisms that arise naturally from auctions used to allocate single dimensional goods these new mechanisms involve computer assisted coordination made possible by the existence of networked computers both mechanisms significantly improve on the performance of administrative and market procedures

models for bundle trading in financial markets abstract bundle trading is a new trend in financial markets that allows traders to submit consolidated orders to sell and buy packages of assets we propose a new bundle based market clearing formulation for portfolio balancing that extends the previous models in the literature through a more detailed representation of portfolios and the formulation of new bidding requirements we also present post optimality tie breaking procedures intended to discriminate between equivalent orders on the basis of submission times numerical results evaluate the bundle effect as well as the bidding flexibility and the computational complexity of the formulation

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

disentangling the incentive and entrenchment effects of large shareholdings this article disentangles the incentive and entrenchment effects of large ownership using data for 1 301 publicly traded corporations in eight east asian economies we find that firm value increases with the cash flow ownership of the largest shareholder consistent with a positive incentive effect but firm value falls when the control rights of the largest shareholder exceed its cash flow ownership consistent with an entrenchment effect given that concentrated corporate ownership is predominant in most countries these findings have relevance for corporate governance across the world

managerial ownership of voting rights abstract managers of firms with dual classes of common stock can choose different quantities of votes for a given cash flow interest by choosing different quantities of the two securities we study managerial stock holdings in 45 dual class firms and find that vote ownership per se is an important motivation for these holdings in that corporate officers and their families hold a median 56 9 of the votes and 24 0 of the common stock cash flows we also find significant family involvement in many sample firms and document four case studies in which explicit acquisition premiums were paid for superior voting shares

allocation of track capacity experimental evidence on the use of priority auctioning in the railway industry allocation of track capacity concerns multiple users facing demand indivisibilities running trains over an inelastic supply of railway tracks the paper suggests a vickrey type mechanism to handle incentive aspects of this technically complex optimisation task here the price for operating a train will correspond to the bids foregone by other operators who are pushed off their preferred routes the paper reports the results of 11 experimental markets using variations of this mechanism where each market includes up to 10 trading periods and subjects bid for routes over a highly stylised railway network the experiments generated solutions that capture 90 100 of potential benefits

investor protection and corporate governance recent research has documented large differences among countries in ownership concentration in publicly traded firms in the breadth and depth of capital markets in dividend policies and in the access of firms to external finance a common element to the explanations of these differences is how well investors both shareholders and creditors are protected by law from expropriation by the managers and controlling shareholders of firms we describe the differences in laws and the effectiveness of their enforcement across countries discuss the possible origins of these differences summarize their consequences and assess potential strategies of corporate governance reform we argue that the legal approach is a more fruitful way to understand corporate governance and its reform than the conventional distinction between bank centered and market centered financial systems

the political economy of fema disaster payments a central contribution of public choice theory to the analysis of government activity is in viewing the activities of government not as determined by some single altruistic dictator but rather as the result of a process involving individual political agents who react to the incentives they face federal disaster relief administered by the federal emergency management agency fema is one activity that is ripe for political influence due to the process of disaster declaration and relief after a disaster strikes a particular state the governor makes a request to the president for disaster assistance following a governor s request the president then decides whether to declare the state or region a disaster area only after a disaster has been declared by the president can disaster relief be given fema is in charge of determining the level of relief funding for the area but additional appropriations are determined by congress in cases requiring large amounts of funding beyond fema s allocated budget the act which governs the rules of federal disaster declaration and expenditures gives the president the authority to declare a disaster without the approval of congress

the continuous combinatorial auction architecture the paper reports the architecture of a continuous combinatorial auction preferences are based on sets of items and feasibility requires the nonintersection of sets countdown clocks replace eligibility and activity requirements typical of rounds based auctions bids remain in the system to be combined with new bids to form winning collections increment requirements dictate improvements over appropriate collections of existing bids the auction evolved from experimental methods and operates at high levels of efficiency field applications are reported and result in natural equilibration in a few hours as opposed to days or weeks required by round based architectures

what makes people think like economists evidence on economic cognition from the survey of americans and economists on the economy abstract the positive economic beliefs of economists and the general public systematically differ what factors make noneconomists think more like economists using the survey of americans and economists on the economy this paper shows people think more like economists 1 if they are well educated 2 if they are male 3 if their real income rose over the last 5 years 4 if they expect their real income to rise over the next 5 years or 5 if they have a high degree of job security however neither high income nor ideological conservatism have this effect my findings for education gender and income have close parallels in political science on tests of objective political knowledge the better educated and males score higher controlling for numerous other variables and the independent effect of income is minor

ultimate ownership income management and legal and extra legal institutions this study provides evidence of the role of both legal and extra legal institutions in limiting the income management induced by the detachment of control rights from the cash flow rights of ultimate owners the tests use a unique comprehensive data set for firm level control and ownership structures from 9 east asian and 13 western european countries univariate regressions show that income management that is induced by the wedge between control rights and cash flow rights is significantly limited in countries with high statutory protection of minority rights proxied by legal tradition minority rights protection the efficiency of the judicial system or disclosure standards and effective extra legal institutions proxied by the effectiveness of competition laws diffusion of the press and tax compliance furthermore multiple regression results show that a common law tradition and an efficient judicial system subsume the effects of the other legal institutions and that a high rate of tax compliance subsumes the effects of the other extra legal institutions in curbing insider income management it is surprising that a high rate of tax compliance ultimately has a greater effect than legal tradition and the efficiency of the judicial system although this finding is unexpected given prior evidence on the dominant roles of legal institutions in macroeconomic issues and corporate policies it is consistent with the recent argument that effective tax enforcement is like a public good in that it can reduce insiders private control benefits an implication of this finding is that closer attention to extra legal institutions has the potential to enhance our understanding of the institutional reforms needed to limit insider private control benefits

the value of the voting right a study of the milan stock exchange experience i study the large premium 82 percent attributed to voting shares on the milan stock exchange the premium varies according to the ownership structare and the concentration of the voting rights and it can be rationalized in the presence of enormous private benefits of control a case study seems to indicate that in italy private benefits of control can easily be worth more than 60 percent of the value of nonvoting equity a tentative explanation for these findings is provided traditional finance theory disregards the value of voting rights in pricing common stock in most cases this omission does not seem harmful many studies of differential voting stocks in different countries have indicated that voting rights are generally worth between 10 percent and 20 percent of the value of common stock the italian evidence i present differs sharply from this view in italy voting shares that have inferior dividend rights trade at an average premium

matching with contracts we develop a model of matching with contracts which incorporates as special cases the college admissions problem the kelso crawford labor market matching model and ascending package auctions we introduce a new law of aggregate demand for the case of discrete heterogeneous workers and show that when workers are substitutes this law is satisfied by profit maximizing firms when workers are substitutes and the law is satisfied truthful reporting is a dominant strategy for workers in a worker offering auction matching algorithm we also parameterize a large class of preferences satisfying the two conditions

a new and improved design for multiobject iterative auctions in this paper we present a new improved design for multiobject auctions and report on the results of experimental tests of that design we merge the better features of two extant but very different auction processes the simultaneous multiple round smr design used by the fcc to auction the electromagnetic spectrum and the adaptive user selection mechanism ausm of banks et al 1989 allocating uncertain and unresponsive resources an experimental approach rand journal of economics vol 20 no 1 pp 1 25 then by adding one crucial new feature we are able to create a new design the resource allocation design rad auction process which performs better than both our experiments demonstrate that the rad auction achieves higher efficiencies lower bidder losses higher net revenues and faster times to completion without increasing the complexity of a bidder s problem

iterative combinatorial auctions with bidder determined combinations in combinatorial auctions multiple distinct items are sold simultaneously and a bidder may place a single bid on a set package of distinct items the determination of packages for bidding is a nontrivial task and existing efficient formats require that bidders know the set of packages and or their valuations in this paper we extend an efficient ascending combinatorial auction mechanism to use approximate single item pricing the single item prices in each round are derived from a linear program that is constructed to reflect the current allocation of packages introduction of approximate single item prices allows for endogenous bid determination where bidders can discover packages that were not included in the original bid set due to nonconvexities single item prices may not exist that are exact marginal values we show that the use of approximate single item prices with endogenous bidding always produces allocations that are at least as efficient as those from bidding with a fixed set of packages based on package pricing a network resource allocation example is given that illustrates the benefits of our endogenous bidding mechanism

what determines the value of corporate votes this paper studies the determinants of the value of voting rights in u s corporations results support the hypothesis that the price of a vote is determined by the expected additional payment vote holders will receive for their votes in case of a control contest the size of this differential payment is a function of the probability that a vote is pivotal in a control contest and the magnitude of the private benefits obtainable by controlling the company simple proxies for these two factors explain up to 30 percent of the variation of the voting premium across companies and through time my findings also suggest that the value of managerial perquisites are at least partially reflected in the price of votes

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

combinatorial auction design combinatorial auctions have two features that greatly affect their design computational complexity of winner determination and opportunities for cooperation among competitors dealing with these forces trade offs between desirable auction properties such as allocative efficiency revenue maximization low transaction costs fairness failure freeness and scalability computational complexity can be dealt with algorithmically by relegating the computational burden to bidders by maintaining fairness in the face of computational limitations by limiting biddable combinations and by limiting the use of combinatorial bids combinatorial auction designs include single round first price sealed bidding vickrey clarke groves vcg mechanisms uniform and market clearing price auctions and iterative combinatorial auctions combinatorial auction designs must deal with exposure problems threshold problems ways to keep the bidding moving at a reasonable pace avoiding and resolving ties and controlling complexity

the simultaneous ascending auction dynamics of price adjustment in experiments and in the uk3g spectrum auction we develop a model of the behavior of bidders in simultaneous ascending auctions based on two principles principle of surplus maximization and principle of bid minimization these principles lead to models of both price dynamics and equilibration leading to disequlibrium structural equations that can be used for estimating bidder values the intention behind the development of this methodology is to provide an auctioneer a method of extracting information during an auction about possible closing prices we benchmark the performance of the model with data from experimental auctions and then apply it to the uk umts or third generation mobile auction

better faster cheaper an experimental analysis of a multiattribute reverse auction mechanism with restricted information feedback the majority of reverse auctions for procurement use a single attribute price format while providing constraints on nonprice attributes such as quality and lead time alternatively a buyer could choose to conduct a multiattribute auction where bidders can specify both a price and levels of nonprice attributes while such an auction may provide higher theoretical utility to the buyer it is not clear that this theoretical improvement will be realized given the increased complexity of the auction in this research we present an ascending auction mechanism for a buyer whose utility function is known and dependent on three attributes motivated by a supply chain procurement problem setting we consider quality and lead time for the two attributes in addition to price the auction mechanism provides the bidders with restricted feedback regarding the buyer s utility function we explore experimentally the performance of this multiattribute auction mechanism as compared to a price only auction mechanism compared with the price only auction we find that our mechanism design is effective in increasing both buyer utility and bidder supplier profits