endogenous entry and self selection in private value auctions an experimental study this paper presents the results of an experimental study of endogenous entry in first price independent private value auctions n potential bidders simultaneously decide whether to participate in an auction or receive a known outside option in the second stage entrants submit bids after learning their own private values and the number of entrants an equilibrium model of heterogeneous risk averse bidders implies a self selection effect where bidding in the auction is lower with endogenous entry because only less risk averse bidders enter this effect is confirmed by the experiment we also observe excessive entry relative to the theoretical model

bidder preferences among auction institutions i introduction auctions have become a pervasive method of exchange in the online world as each day thousands of auctions take place online and this trade volume totals to billions of dollars worth of goods per year 1 this large volume of auction transactions implies the existence of a large number of sellers competing for buyers the obvious implication is that the competition among the sellers for the pool of potential buyers can be fierce and any competitive edge a seller can find could be important one such competitive edge a seller might exploit is using an auction design that attracts bidders away from their competitors when designing a real auction or modeling a theoretical one the entry decision of prospective bidders is rarely considered most auction analysis is performed assuming that a certain number of bidders will participate for certain or perhaps that the number of bidders is unknown and randomly determined it should be clear however that the most crucial part of a successful auction is encouraging as many bidders as possible to participate in general this should be expected to have a positive effect on revenue at least in noncommon value environments and in certain types of auctions it may help combat the possibility of bidder collusion because there are typically competing auctions available for similar goods or even outside options that bidders can pursue when auctions are for unique goods it is important to understand how the aspects of an auction format can effect the entry decision of a bidder consider a bidder who is faced with the choice of entering one of two auctions for similar or even identical objects how does this bidder make the decision of which auction to enter the obvious answer is that the bidder will enter into the auction that maximizes his or her expected utility so long as that expected utility is greater than some reservation value the real question then is how are these expected utilities constructed profit from participating in the auction is an obvious argument there are also a number of environmental considerations that might effect this decision that would be difficult to account for precisely such as the reputation and trustworthiness of the auctioneer quality of the advertisement for the auction and things of this nature it is also possible that the format of the auction itself can have an impact on the preferences of the bidder this latter point will be the issue of this study the particular focus will be looking at bidder preferences between the two most common standard auction formats used in the field the sealed bid first price will be abbreviated as just the sealed bid auction and the ascending or english auction the other reason we are interested in comparing these two auction formats rather than the ascending and second price or first price and descending is that it seems reasonable to expect bidders to have preferences between the two due to the strategic differences between them such differences lead to substantial differences in terms of the difficulty of deciding how to bid and also in the possibility that an outcome leads to a bidder experiencing some form of regret regret may occur in a first price auction when a bidder loses to a bid that is below his value as he may think that if only he had bid higher he could have won although such feelings of regret may be considered irrational that does not preclude their existence such a scenario should not reasonably occur in an ascending auction if one considers the situation of a bidder choosing between two auctions that differ only in regard to whether the auction is being conducted according to an ascending or sealed bid format it is not immediately obvious which would be the most preferred even assuming a standard symmetric independent private values environment were all bidders risk neutral then of course revenue equivalence would hold and the bidders would be indifferent

on favoritism in auctions with entry abstract we examine the problem of endogenous entry in a single unit auction when the seller s welfare depends positively on the utility of a subset of potential bidders we show that unless the seller values those bidders welfare more than her own private utility a nondiscriminatory auction is optimal

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

appropriate design of auctions for renewable energy support prequalifications and penalties abstract auctions are a promising tool to accomplish renewable energy support res however they involve diverse risks for the auctioneer and the bidders the major risk for the auctioneer with respect to the expansion target and the acceptance of auctions for res in general is the risk of non realization awarded bidders do not realize their projects the main reasons are bidders uncertainties concerning their project costs the auctioneer can reduce the non realization risk by taking various measures the most discussed and implemented measures are financial and physical prequalifications and penalties an evaluation of these measures has relevant implications for an appropriate auctions design for res the non realization option induces lower bids a suitable combination of financial and physical prequalifications can reduce the non realization risk significantly however involves sunk costs counterintuitively first price auction and second price auction lead to different expected award prices and different realization probabilities penalties bear a high risk of inefficient auction outcomes the appropriate parametrization and combination of the measures is challenging under consideration of all implications we recommend high financial and adjusted physical prequalifications to achieve a sufficiently high realization rate while maintaining efficiency

auctions with a stochastic number of bidders abstract auction theory is generalized by allowing the number of bidders to be stochastic in a first price sealed bid auction with bidders having constant absolute risk aversion the expected selling price is higher when the bidders do not know how many other bidders there are than when they do know this thus the seller should conceal the number of bidders if he can moreover a bidder s ex ante expected utility is the same whether or not there is a policy of concealing the number of bidders concealment therefore pareto dominates announcement with risk neutral bidders the optimal auction is the same whether or not the bidders know who their competitors are

optimal departures from marginal cost pricing focuses on departures from marginal cost pricing optimal allocation or resources level of tax revenue that will be collected by the government theorems developed for resource allocation ebsco

deregulation redux does mandating access to bottleneck facilities necessarily improve welfare we demonstrate that deregulation in the form of vertical separation of network components into natural monopoly and potentially competitive markets does not truly represent a lessening of regulatory burdens that is vertical separation is not synonymous with deregulation more competitors is not equivalent to more competition we assume a public interest regulator that is constrained to set a unit price that maximizes expected welfare subject to a break even constraint we show that under both symmetric and asymmetric information cases the information demands on the regulator of the vertically integrated system are no greater than those in the case of vertical separation

an evolutionary approach to technological innovation in agriculture some preliminary remarks abstract this article proposes an interpretation of the process of technological innovation in agriculture we begin with a criticism to the idea of agriculture as a particular environment in economic analysis we argue that some dynamic concepts from economics of innovation especially as seen by the evolutionary literature can be used as an adequate theoretical reference to study innovation in agriculture we then suggest an interpretation in terms of technological trajectories in order to explain the complexity of the technological regime in agriculture finally we discuss the present stage of transformation in this technological regime and the perspectives of the arising new trajectories

optimal auctions revisited in symmetric privately known values oral auctions with costly entry for bidders the seller can do no better than by committing ex ante to a reservation price and entry fees or subsidies which result in no fewer and at most one more bidders than a reservation price equal to the seller s value would in the absence of entry fees or subsidies journal of economic literature classification numbers d44 c72

ranking equilibrium competition in auctions with participation costs this paper studies the degrees of equilibrium competition in three common forms of auctions with costly participation and shows that when bidders valuation distribution is concave there is a simple condition to rank the equilibrium competition of those auctions it also investigates how the results are related to stochastic ordering of bidders valuation distributions and provides some illustrative examples

economic insights from internet auctions this paper surveys recent studies of internet auctions four main areas of research are summarized first we survey several studies that document and attempt to explain the frequently observed sniping or last second bidding behavior in these auctions second we summarize several methods proposed to quantify the distortions caused by asymmetric information in these markets most notably due to the winner s curse third we explore research about the role of reputation mechanisms installed to help combat these distortions finally we discuss what internet auctions have to teach us about auction design

robustness of bidder preferences among auction institutions i introduction the answer to the question of how bidders choose to enter one auction versus an alternative competing auction is important to understand in providing a complete picture of the nature of endogenous entry decisions into auctions the issue of how a bidder chooses which among alternative auctions to enter as well as whether to enter an auction at all is of substantial importance to auctioneers attempting to attract bidders to their auctions there is a growing literature addressing issues in endogenous entry in auctions there are several papers such as engelbrecht wiggans 1993 pevnitskaya 2004 and palfrey and pevnitskaya 2008 that consider the decision of whether to enter an auction or not and study the effect of endogenous entry on bidding behavior there is a much larger group for example harstad 1990 engelbrecht wiggans 1993 levin and smith 1994 mcafee 1993 and mcafee and mcmillan 1987 that considers competition between auctioneers in which the auctioneers are competing along some characteristic such as entry price we consider the case in which auctioneers may be competing with each other based on the choice of auction mechanism our interest is in the degree to which the auction mechanism itself might impact the entry decisions of potential bidders of course there would be a direct pecuniary impact of the mechanism in that bidders should be more likely to enter auction mechanisms that they believe allow them to get lower prices but there may be other cognitive issues in regard to the structure of the mechanism that may also impact the choice behavior in ivanova stenzel and salmon iss 2004a we introduced an experimental design aimed at eliciting and measuring preferences subjects might possess for different auction institutions and applied the design to testing bidder preferences between ascending a dynamic mechanism and sealed bid first price a static mechanism auctions it seems reasonable to expect bidders to have preferences between these two auction mechanisms due to the strategic differences between them in a first price auction the winner pays a price equal to his own bid whereas in the ascending auction he pays a price that is an increment above the second highest bid these differences might result in difficulty of deciding how to bid and in the possibility of experiencing some form of regret 1 the design involved having subjects make a choice between entering into a two bidder sealed bid first price auction versus a two bidder ascending auction each with different entry prices by varying the entry prices we could measure the subjects willingness to pay for either auction our main finding in the paper was that while subjects exhibited strong preferences for the ascending auction at equal entry prices they were not willing to pay up to the expected profit difference between the two auctions to participate in an ascending auction thus they ended up entering the supposedly less preferred sealed bid first price auction even in situations in which they would expect to make a higher net surplus including the cost of the entry fee by entering into the ascending auction instead that paper proposed one possible answer to the puzzle that involved assuming that bidders were risk averse in their bidding behavior and then risk averse to the same degree in their auction choice behavior this explanation worked because neither risk averse nor approximately risk neutral bidders should be expected to pay much to enter into an ascending auction instead of a sealed bid first price auction just as we observed in the experiment for the most risk averse bidders this is because while they bid the highest in the first price auction and therefore expected little surplus in the event that they win they consequently end up winning with higher probability than less risk averse bidders this is a trade off risk a verse bidders are willing to accept and consequently it is easy to show that highly risk averse bidders should not be willing to pay much to get into the more lucrative though risky ascending auction

equilibrium bid functions for auctions with an uncertain number of bidders abstract the number of rivals may be unknown when a bidding strategy is formulated in an auction in a symmetric model with risk neutral bidders holding independent information we obtain explicit equilibrium bidding functions for first price and second price auctions with uncertainty about the number of rivals five auctions are revenue equivalent first price and second price auctions each with the number of bidders known or uncertain and english auctions

auctions an introduction abstract this is a detailed introduction to auction theory it begins with a simple analysis of standard auctions and then uses a strikingly simple general solution of symmetric private values auctions to prove the payoff equivalence of many auction rules the basic framework is then modified to admit risk aversion multi unit and repeated auctions as well as collusion then follows an introduction to optimal auctions with and without stochastic entry and to common value auctions and the winner s curse problem the survey closes with a sample of applications from the regulation of natural monopolies to price competition in oligopoly and the government securities market

voluntary agreements as an environmental policy instrument evaluation criteria abstract as the resource to voluntary action grows wider a question must be held on the factors that influence the performance of a voluntary agreement as an environmental policy instrument our goal in this paper is to answer that question outlining the main variables that make a voluntary agreement simultaneously efficient effective and just using several articles on the subject of voluntary action under the themes of economic regulation and of contracts under asymmetric information as well as available reports on the portuguese and european experience on the use of voluntary agreements we will undertake this objective following three steps i we begin by underlining the main factors that justify the private and public option for voluntary action ii we then present an analysis of the co regulation process under the requirements of the three e criteria efficiency effectiveness and equity iii finally we conclude by presenting an evaluation table that summarises the elements that we found to be the most important for the performance of the voluntary action in each one of those criteria

detecting collusion on highway procurement this paper proposes a procedure to detect collusion in asymmetric first price procurement the main objective is twofold first to provide a methodology to detect collusion using a structural approach and second to apply the methodology to field data on procurement auctions for highway construction in california i identify two different sets of firms as potential ring members relying on an exogenous number of bidders and the assumption that within each type bidders are symmetric i find evidence supporting the collusive scheme for the two mentioned sets of firms by comparing a model of competition and a model of collusion

sectoral patterns of technical change towards a taxonomy and a theory abstract the purpose of the paper is to describe and explain sectoral patterns of technical change as revealed by data on about 2000 significant innovations in britain since 1945 most technological knowledge turns out not to be information that is generally applicable and easily reproducible but specific to firms and applications cumulative in development and varied amongst sectors in source and direction innovating firms principally in electronics and chemicals are relatively big and they develop innovations over a wide range of specific product groups within their principal sector but relatively few outside firms principally in mechanical and instrument engineering are relatively small and specialised and they exist in symbiosis with large firms in scale intensive sectors like metal manufacture and vehicles who make a significant contribution to their own process technology in textile firms on the other hand most process innovations come from suppliers these characteristics and variations can be classified in a three part taxonomy based on firms 1 supplier dominated 2 production intensive 3 science based they can be explained by sources of technology requirements of users and possibilities for appropriation this explanation has implications for our understanding of the sources and directions of technical change firms diversification behaviour the dynamic relationship between technology and industrial structure and the formation of technological skills and advantages at the level of the firm the region and the country

the need for policy to address the food system lock in a case study of the finnish context abstract the introduction of synthetic fertilizers transformed the food system into the one we know today in the western world the present paper argues that this transformation has become an irreversible self feeding process referred to as food system lock in which threatens planetary boundaries of nitrogen and phosphorus hence the food security in the future a system in a lock in state can undermine its own existence by deteriorating the capacity to cope with upcoming crises of resource scarcity and environmental instability in this paper the roots of lock in are explored and empirically grounded in the historical narrative of the food system transition in finland in the past 60 years the theoretical framework builds on socio technical studies and the economic theory of increasing returns the aim of the paper is to identify through an evolutionary analysis the processes of increasing returns that have become path inefficient and have reinforced the lock in in the food system three separate but interdependent processes in the production in the policy and institutions and in the supply chain create systematic resistance towards sustainability transition these findings indicate that more attention should be paid at the public policies that are currently too narrow in their scope and do not effectively bridge the entire system from food production to consumption public intervention is critical for the unlocking but individuals in the various parts of the food system are those who create new paths

how auctions work for wine and art interview auctioneers and even to buy a little wine in the meantime i have also had the opportunity with john abowd 1988 to observe and collect data on the auction sale of impressionist and contemporary paintings this paper reports on some of the empirical regularities that i and others have observed in the actual operation of the auction markets for these items in view of the rich and diverse array of theoretical literature on auctions it seems high time economists began to spell out precisely what facts it is meant to explain 2

the effect of regret on optimal bidding in auctions while most models of auctions and competitive bidding assume that each bidder s utility for an outcome depends only on his own profit we allow the utility to also depend on any regret that a bidder suffers after the fact and characterize when and how this affects bidding specifically a winner might regret money left on the table in federal offshore oil lease sales while a loser might regret seeing an object sell for less than his own value for it we show that for risk neutral bidders who after the fact know the winner s price for the object a bidder s optimal bidding strategy will not depend on the relative weight given to profit versus regret if both forms of regret weigh equally heavily however if bidders weight money left on the table regret more heavily then the bid taker suffers likewise if losers do not learn the winner s price then the bid taker also suffers thus the existing models exclusion of regret from risk neutral bidders utility functions affects the applicability of the

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

free entry and social inefficiency our goal is to provide a simple yet general exposition of the conditions under which the number of entrants in a free entry equilibrium is excessive insufficient or optimal our analysis compares the number of firms that enter a market when there is free entry with the number that would be desired by a social planner who is unable to control the behavior of firms once they are in the market that is we consider the second best problem of choosing the welfare maximizing number of firms while we take as given their noncompetitive behavior after entry we demonstrate that the crucial conditions for establishing the presence of an entry bias can be stated quite simply in terms of the outcome of the postentry game played by entrants in contrast to previous work we do not need to model this postentry game explicitly

pricing in the nuclear power industry public or private interest this paper tests empirically the ramsey version of the public interest theory of regulation by examining the pricing practices in the nuclear power industry using a 1985 cross sectional sample of 40 electric utilities other researchers have avoided this segment of the industry because of difficulties with nuclear fuel data or perceived differences in the underlying production function we show that regulators respond to political influences according to the stigler peltzman version of regulation and that ramsey pricing cannot be validated at least for the nuclear segment of the electric power industry

auctions with an inexpert bidder abstract we consider an auction in which the behavior of one potential bidder departs mildly from full rationality we show that the presence of such an inexpert bidder can be enough to discourage all of an infinitely large population of fully rational potential bidders from entering an auction furthermore this departure from full rationality does not reduce the inexpert bidder s payoff

do auctioneers pick optimal reserve prices we investigate how auctioneers set reserve prices in auctions a well established theoretical result assuming risk neutrality of the seller is that the optimal reserve price should not depend on the number of participating bidders in a set of controlled laboratory experiments we find that seller behavior often deviates from the theoretical benchmarks we extend the existing theory to explore three alternative explanations for our results risk aversion anticipated regret and probability weighting after fitting our data to each of these models through parameter estimation techniques on both an aggregate and individual level we find that all three models are consistent with some of the characteristics of our data but that the regret model provides a slightly more favorable fit overall this paper was accepted by teck hua ho decision analysis

on optimal reservation prices in auctions the theory of auction design examines how various factors affect the outcome of an auction most of the existing literature focuses on how varying the amount of information available to each bidder affects the bid taker s expected revenue when all other factors remain constant this paper studies how the bid taker s expected revenue varies with changes in the auction format when such changes affect the number of bidders and in turn the bidders maximum value for the object being sold specifically we examine how varying the reservation price or screening level affects the bid taker s expected revenue though its effect on the number of bidders for two simple examples the losses associated with a reduced number of bidders outweighs any benefits that nontrivial reservation prices might have had in models with an exogonously set number of bidders

disclosure policies in research contests with stochastic entry abstract this paper models research contests as an all pay auction with stochastic entry and analyzes the effect of disclosing the actual number of participants on the expected winning bid i find that the classic disclosure irrelevance principle on expected revenue does not extend to the ranking on expected winning bid the ranking on expected winning bid crucially depends on the number of potential bidders participation probabilities and the distribution of bidders valuations when there are more than two potential bidders fully concealing the actual number of participants elicits a higher expected winning bid if potential bidders have low participation probabilities whereas the rank reverses if bidders have high participation probabilities and high chances of being high types

field experiments on the effects of reserve prices in auctions more magic on the internet i present experimental evidence on the effects of minimum bids in first price sealed bid auctions the auction experiments manipulated the minimum bids in a preexisting market on the internet for collectible trading cards from the game magic the gathering i examine a number of outcomes including the number of participating bidders the probability of sale the levels of individual bids and the auctioneer s revenues the benchmark theoretical model is one with symmetric risk neutral bidders with independent private values the results verify a number of the predictions concerning equilibrium bidding many bidders behave strategically anticipating the effects of the reserve price on others bids

rational expectations information acquisition and competitive bidding most rational expectations market equilibrium models are not models of price formation and naive mechanisms leading to such equilibria can be severely manipulable in this paper a bidding model is developed which has the market like features that bidders act as price takers and that prices convey information higher equilibrium prices convey more favorable information about the quality of the objects being sold than do lower prices bidders can benefit from trading only if they have a transactions motive or if they have access to inside information apart from exceptional cases prices are not fully revealing a two stage model is developed in which bidders may acquire information at a cost before bidding and for which the equilibrium price is fully revealing resolving a well known paradox

theories of regulation and the deregulation movement we started this paper with what seemed a paradox no sooner had the various special interest theories of regulation achieved a degree of acceptance than regulatory reforms were instituted in many industries consistent with the public interest on the face of it this appeared to give reason to doubt the validity of the special interest theories

pennies from ebay the determinants of price in online auctions this paper presents an exploratory analysis of the determinants of prices in online auctions for collectible united states one cent coins at the ebay web site starting with an initial data set of 20 000 auctions we perform regression analysis on a restricted sample of 461 coins for which we obtained estimates of book value we have three major findings first a seller s feedback ratings reported by other ebay users have a measurable effect on her auction prices negative feedback ratings have a much greater effect than positive feedback ratings do second minimum bids and reserve prices have positive effects on the final auction price in particular minimum bids appear only to have a significant effect when they are binding on a single bidder as predicted by theory third when a seller chooses to have her auction last for a longer period of days this significantly increases the auction price on average

optimal reservation prices in auctions the risk neutral independent private values ipv auction model produces curious results regarding the use of reservation prices no matter how many bidders the seller should announce a fixed reservation price above his true value this is notable since the seller gains by adopting an inefficient institution and puzzling because it conflicts with common practice the authors relax the ipv assumption characterize optimal reservation prices in a richer class of auctions and show that when information is correlated the seller s optimal reservation price converges to his true value often monotonically and rapidly as the number of bidders grows copyright 1996 by royal economic society

bid preference programs and participation in highway procurement auctions we use data from highway procurement auctions subject to california s small business preference program to study the effect of bid preferences on auction outcomes our analysis is based on an estimated model of firms bidding and participation decisions which allows us to evaluate the effects of current and alternative policy designs we show that incorporating participation responses significantly alters the assessment of preferential treatment policies

incumbency and entry in license auctions the anglo dutch auction meets another simple alternative the existence of ex ante strong incumbents may constitute a barrier to entry in auctions for goods such as licenses favoring the allocation to entrants is a way to induce entry and thus create competition designs such as the anglo dutch auction have been proposed with this goal in mind we first show that the anglo dutch auction does indeed foster entry and increases the revenues of the seller however we argue that a more effective way could be to stage the allocation of the good so that each stage reveals information about the participants we show that a sequence of english auctions with high reserve prices in early rounds fulfils this property and is more efficient than any one stage entry auction moreover it also outperforms the anglo dutch auction in terms of seller s revenues

equalizing discrimination and cartel pricing in transport rate regulation there are two possible outcomes of transport regulation 1 maintaining a carrier cartel and 2 imposing equalizing discrimination against advantaged and in favor of disadvantaged shippers both functions have required a complex rate structure to enforce the respective forms of price discrimination using a sample of freight bills from motor carriers and railroads this paper demonstrates that the principal result of motor carrier regulation has been to maintain a cartel of truckers while railroad regulation has thwarted the wishes of the railroad cartel by imposing equalizing discrimination on weak and strong shippers motor carrier rates respond in an economically rational manner to costs and shipper bargaining power rail rates are either unresponsive or perversely responsive to the same factors deregulation should have divergent effects in the two industries

the farm tractor and the nature of technological innovation abstract while the of diffusion of technology has been extensively studied a sysetematic treatment of origin of innovations is generally lacking this has important implications for studies not only of the phenomenon of diffusion itself but also for studies of long term growth of productivity this paper presents an investigation of technological innovations in the farm tractor during a time period of nearly five decades from its genesis it is concluded that the observed advances in technology are attributable to variations in farm size and experience acquired in the production and utilization of the tractor over the course of time more generally two main hypotheses of technological change emerge from the results of thus study one is the hypothesis of learning i e that technological innovation originates in the accumulated experience of a practical nature the other is the hypothesis of scaling i e that the process of innovation is further governed by changes in the size of the larger system within which the technology is embedded however certain widely believed alternative hypotheses of technological change do not seem to generally hold it is concluded that technological development is an evolutionary process which is best understood in terms of an internal logic of its own

strategic ignorance in a second price auction abstract suppose that bidders may publicly choose not to learn their values prior to a second price auction with costly bidding all equilibria with truthful bidding exhibit bidder ignorance when the number of bidders is sufficiently small ignorance considerations also affect the optimal reserve price

on absolute auctions and secret reserve prices from a theory viewpoint the use of auctions with zero public reserve prices also called absolute auctions or of auctions with secret reserve prices is somewhat puzzling despite being common by allowing that buyers differ in their processing of past data regarding how the participation rate varies with the auction format and how reserve prices are distributed when secret we show in a competitive environment that these auction formats may endogenously emerge we also analyze how buyers with various sophistications and sellers with various costs sort into the different formats thereby offering a range of testable predictions alternative approaches are reviewed

auctions with heterogeneous entry costs it is well known that if bidders have independent private values and homogeneous entry costs a rst or second price auction with a reserve price equal to the seller s value maximizes social surplus and seller revenue and leaves bidders with no surplus further in mixed strategy entry equilibria social surplus and seller revenue decrease with the number of bidders we show that when entry costs are heterogeneous and private information the revenue maximizing reserve price is above the seller s value a positive inspection fee and a reserve price equal to the seller s value generates even more revenue and in either case bidders capture informational rents further seller revenue and social surplus may either increase or decrease with the number of bidders nevertheless seller revenue is asymptotically the same whether entry costs are homogeneous or heterogeneous our results are framed in terms of screening values rather than reserve prices and apply to any standard auction

empirical evidence on the impact of reserve prices in english auctions we study the impact of reserve prices on the revenue of english auctions using a unique hand collected database of virtual football players from the online football management game hattrick as theoretically predicted setting a reserve price entails a trade off between the cost of setting it too high and having the good go unsold and the benefit associated with a higher revenue should the reserve price successfully extract surplus from the highest bidder overall we find the net benefit of setting a higher reserve price to be negative regardless of the value of the reserve price this is a novel result insofar as previous literature has generally found an insignificant or positive effect of the reserve price on unconditional auction revenue

competing trade mechanisms and monotone mechanism choice abstract we investigate the choice between posted prices and auctions of competing sellers with private valuations assuming that buyers face higher hassle costs in auctions we show the existence of monotone pure strategy equilibria where sellers offer posted prices rather than auctions if and only if they have a sufficiently high reservation value posted prices sell with lower probability but yield a larger revenue in case of trade using an empirical strategy to compare revenues of posted prices and auctions that takes selling probabilities explicitly into account we find our theoretical predictions supported by data from ebay auctions on ticket sales for the euro 2008 european football championship

international differences in telephone rate structures and the organization of business subscribers this study examines the ratio of long distance to local telephone prices across a sample of developed countries using regression analysis support is provided for the hypothesis that long distance prices will be lower relative to local prices to the extent that large business subscribers are a larger share of the population of subscribers however the lobbying impact of business subscribers interacts with the anticipated deadweight costs of cross subsidization prior competitive entry into the telecommunications sector is also associated with lower relative long distance prices

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

a study of innovation in the pesticide industry analysis of the innovation record of an industrial sector abstract this is a study of innovation in pesticides from 1930 to 1980 innovation output indicators used are product innovation and patent counts innovations are evaluated in terms of originality and market success market demand is measured by the value of sales per year at constant prices the distribution of these indicators over the 50 year period is compared and contrasted to the historical development of the sector a number of hypotheses are proposed regarding the dynamics of the process of innovation notably the importance of market successful radical innovations as driving forces the central role of large research intensive companies the interplay between basic and applied research and the effects of corporate technological traditions lastly the potential and some limitations in the use of patents as innovation output indicators are described

reserve price signaling abstract in a general auction model in which bidders signals are affiliated we characterize the unique separating equilibrium in which the seller can use reserve prices to credibly signal her private information when the buyers signals are independent the optimal reserve price is shown to be increasing in the number of bidders under certain conditions we also demonstrate that the probability that the item is sold at the reserve price can increase as the number of bidders increases which indicates a more central role for reserve prices than perceived in the standard auction models

reserve prices in auctions as reference points we consider second price and first price auctions in the symmetric independentprivate values framework we modify the standard model by theassumption that the bidders have reference based utility where the reserveprice minimum bid plays the role of the reference point in contrast to theusual result the seller s optimal reserve price is increasing in the number ofbidders even if an individual bidder perceives only a very small utility losswhen he has to pay more than the reserve price the impact on the optimalreserve price can be strong when there are many bidders

uncovering regulators social welfare weights this article describes a procedure that can be used to infer interesting information about the preferences of regulators from the pricing decisions they make this is done by using an adaptation of the familiar ramsey pricing model which allows benefits derived from the consumption of different goods or derived by different consumers to carry different social weights these weights are then exposed by inverting the first order conditions of the constrained maximum problem

behavioral models for first price sealed bid auctions with the one shot decision theory abstract we build an auction model with the one shot decision theory which describes the process of a bidder deciding his her bidding price in first price sealed bid auctions the decision making procedure involves two steps first for each of his her possible bidding prices the bidder examines every possible highest bidding price provided by the other bidders and chooses one as a focus point of this bidding price of him her then the bidder determines such a bidding price as the optimal one that generates the best outcome when its focus point occurs the optimal bidding price can be obtained and two common phenomena in auction markets throwing away and overbidding are well explained

an exogeneity test for a simultaneous equation tobit model with an application to labor supply a test of weak exogeneity in the simultaneous equation tobit model is proposed and illustrated using a female labour supply model estimated using cross section data the test statistic can be simply output from any standard tobit maximum likelihood package and is asymptotically efficient the procedure provides consistent estimators for the simultaneous tobit model whose asymptotic covariance matrix is a simple extension of the usual tobit formula we also provide the lagrange multiplier test of weak exogeneity this abstract was borrowed from another version of this item

the winner s curse reserve prices and endogenous entry empirical insights from ebay auctions internet auctions have recently gained widespread popularity and are one of the most successful forms of electronic commerce we examine a unique data set of ebay coin auctions to explore the determinants of bidder and seller behavior we begin by documenting a number of empirical regularities in our data set of ebay auctions next we specify and estimate a structural econometric model of bidding on ebay using our parameter estimates from this model we measure the extent of the winner s curse and simulate seller revenue under different reserve prices